How is a 401(k) plan funded?
The 401(k) plan is funded with contributions made by the employee and, often, the employer. Eligible employees can chose to participate by making contributions called elective deferrals. Employers can elect to contribute in a number of ways. They can match employee contributions following a formula established in the plan. They can also choose to make profit sharing and other types of contributions. Except as directed by the provisions of the plan, the employer is not required to make contributions.
