A 401(k) retirement plan is a type of employer-sponsored retirement account that allows employees to save and invest for their retirement. It is named after the section of the U.S. Internal Revenue Code that governs it.

In a 401(k) plan, employees can contribute a portion of their pre-tax salary into the account. Employers may also make matching contributions based on a percentage of the employee’s salary. The money in the 401(k) account grows tax-deferred until retirement when it can be withdrawn.

Some benefits of a 401(k) plan include tax advantages, such as tax-deferred growth and potential tax savings on contributions. It also allows individuals to save for retirement with the help of employer matching contributions, and the flexibility to choose investment options based on their risk tolerance and financial goals.

Yes, there are limitations to 401(k) plans. The annual contribution limit for an individual is set by the IRS and may change each year. Additionally, there may be restrictions on when and how funds can be withdrawn without penalty before reaching retirement age.

When changing jobs, individuals have several options for their 401(k) plan. They can leave the funds in the current employer’s plan, roll it over to the new employer’s plan, roll it over to an individual retirement account (IRA), or cash it out (which may result in taxes and penalties).

In general, you cannot withdraw money from your 401(k) before reaching retirement age without incurring taxes and penalties. However, there are certain circumstances, such as financial hardship or disability, that may allow for early withdrawals without penalties, although taxes may still apply.