401(k) plan

401(k) plan is a defined contribution plan offered by a corporation to its employees, which allows employees to set aside tax-deferred income for retirement purposes, and in some cases employers will match their contribution dollar-for-dollar. Taking a distribution of the funds before a certain specified age will trigger a penalty tax, so early withdrawals are generally frowned down upon.

Some people believe that when the baby-boomers retire and start selling off stocks in their 401k plan, this will cause a long bear market from the oversupply of stocks.

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