401(k) Workplace Retirement Plan for Beginners
A 401(k) workplace retirement plan is an employer-sponsored account that lets many United States workers save and invest for retirement directly from their paycheck.
How a 401(k) works
You choose how much of your paycheck to contribute, up to the plan and Internal Revenue Service limits. Your employer may also add matching or nonelective contributions. The money is invested based on the options available inside your plan.
2026 contribution basics
| Rule | Beginner version |
|---|---|
| Employee elective deferral limit | For 2026, the regular employee elective deferral limit for many 401(k) plans is $24,500. |
| Catch-up contributions | If the plan permits it, participants age 50 or older can generally contribute an additional $8,000 in 2026. A higher catch-up limit applies for ages 60 to 63. |
| Employer match | Your employer may match part of your contribution. The exact formula depends on your plan. |
| Overall plan limit | Employee and employer contributions together are subject to a separate overall annual limit. |
Traditional vs Roth 401(k)
Some plans offer traditional and Roth 401(k) contributions. Traditional contributions may reduce taxable income today, while withdrawals are generally taxable later. Roth contributions use after-tax money, but qualified withdrawals may be tax-free later.
A simple beginner order
Read the plan match formula and vesting rules before deciding how much to contribute.
Retirement investing works better when you are not forced to pull money out for small emergencies.
Many plans offer target-date funds or broad index fund options. Understand fees and risk before choosing.
Small automatic increases can help without shocking your monthly cash flow.
Use the money order of operations if you are deciding where a workplace retirement plan fits next to debt payoff and emergency savings.