A 401(k) is a retirement savings plan sponsored by an employer that allows employees to contribute a portion of their salary to an individual account that is invested in a range of options such as stocks, bonds, and mutual funds. Employers may also match employee contributions. Contributions and earnings on investments in a 401(k) account are not taxed until the money is withdrawn, providing a tax benefit for the employee. The 401(k) plan gets its name from the section of the Internal Revenue Code that created it.