A 401(k) allows you to withhold money from your paycheck to contribute to the plan. It reduces your tax obligation while helping you save for retirement. (You will be taxed when you take money out of the plan.) A 401(k) may allow an employee to control the amount of money that is withheld and change the amount as needed. They may be able to determine their own investment strategy in some cases. If you are an employer, you may find a 401(k) appealing because it imposes fewer costs.