401(k)
Category: Retirement & health
An employer-sponsored retirement plan. Traditional elective deferrals reduce taxable wages; Roth 401(k) contributions are after-tax. The 2026 elective deferral limit is $24,500 under age 50.
How 401(k) fits 2026 planning
401(k) sits inside retirement contribution limits, distribution timing, and how pre-tax vs Roth choices change AGI. For tax year 2026, US Tax Tools treats year-scoped constants (brackets, contribution limits, wage bases, credit schedules) as separate datasets — so explanations of 401(k) should be read with the same year selected in any linked calculator.
Category focus: Retirement & health. Readers usually land on this page while comparing a paycheck estimate, a credit phaseout, or a retirement contribution room figure that depends on understanding 401(k) first.
Worked example
Deferring 10% of an $100,000 salary into a traditional 401(k) reduces W-2 Box 1 wages by $10,000 while still counting toward the annual deferral limit.
Treat the example as a teaching sketch, not a filing position. Change filing status, state residency, or mid-year events and the same definition of 401(k) can produce a different cash outcome even when the glossary text stays the same.
What to watch for
Definitions of 401(k) can differ slightly across IRS publications, SSA rules, Marketplace subsidy worksheets, and state agencies. When two programs both say “income,” confirm which modification rules apply — MAGI for one credit is not always MAGI for another.
Legislation and inflation adjustments can move the dollar thresholds around 401(k) without renaming the concept. Prefer the effective date on the primary source (Rev. Proc., SSA notice, USDA table, or state DOR bulletin) over any blog summary — including this one if a later notice supersedes it.
Confirm how 401(k) appears on your forms by reading the IRS instructions for the schedules that match your facts. Educational definitions here cannot capture every exception or state overlay.
You may also see this concept labeled as 401(k), elective deferral. Search engines and payroll portals sometimes use those aliases interchangeably with “401(k).”
Next step
When you are ready to model numbers, open the 401(k) related calculator on US Tax Tools. Engines keep tax-year datasets separate so a 2025 habit does not silently reuse a 2026 constant.
Related reading: Tax insights for longer 2026 explainers, Methodology for how engines store cents and traces, and Disclaimer for educational-use limits.