In which plan can an employee elect for their employer to contribute on their behalf or pay an equivalent amount directly to them?

In a 401(k) Plan, employees have the option to elect for their employer to make contributions directly to their retirement account. This can take the form of a matching contribution based on the employee's own contributions, or it can be a non-elective contribution made by the employer regardless of the employee's contributions. The essence of a 401(k) is that it incentivizes saving for retirement through tax-deferred growth, and many employers offer to match a percentage of employee contributions, greatly enhancing the retirement saving potential.

Additionally, employees have the flexibility to manage their retirement savings within a 401(k), choosing from various investment options as permitted by their plan. This feature of being able to allocate employer contributions in tandem with the employee's own contributions makes the 401(k) Plan a popular choice among retirement savings vehicles.

In contrast, other plans like a Defined Benefit Pension Plan guarantee a specific payout at retirement based on a formula, while a Defined Contribution Pension Plan generally refers to any plan that defines the contributions made, without necessarily allowing direct payment options. The Money Purchase Pension Plan is a type of defined contribution where the employer contributes a fixed percentage of the employee's earnings, but it does not offer the same flexibility in employer contributions as a