What Is 401K For? 
401 -LRB- k -RRB- is a part of the Internal Revenues Tax code . It is the part that allows employers to establish defined contribution plans for their employees . In a defined contribution plan each employee has their own account . The employer has the option of contributing to the plan . Usually a selection of investments is available to the employee . The Employee is then responsible to select the investment -LRB- s -RRB- to be used for their account . The employers contribution , if any , is frequently directed by the employer into a certain investment . The 401 -LRB- k -RRB- is rapidly becoming the retirement plan of choice in the USA . 