What type of plan allows employees to defer a portion of their salary into a retirement savings account?

A Section 401(k) plan is designed specifically to allow employees to defer a portion of their salary into a retirement savings account. This type of plan gives employees the opportunity to contribute pre-tax dollars, which can reduce their taxable income in the current year, effectively enabling them to save for retirement while potentially benefiting from tax advantages. In a traditional sense, the contributions made into a 401(k) are typically matched by employers up to a certain percentage, further incentivizing employees to participate.

The 401(k) plan also allows for investment growth on a tax-deferred basis until funds are withdrawn, usually during retirement. This can significantly enhance the total value of the retirement account over time due to compounded growth.

Other types of plans listed, such as the Section 403(b) plan and the Section 457 plan, also allow for salary deferral but are tailored for different types of organizations and employee groups. For example, 403(b) plans are primarily for employees of public schools and certain tax-exempt organizations, while 457 plans are for governmental and non-profit employees. Profit-sharing plans, on the other hand, are employer-funded plans where contributions are contingent on the company's profitability, and they do not typically involve salary deferrals by employees. Thus