401(k) example

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Samantha works for a software company.  The company has a qualifying 401(k) plan that complies with ERISA and the Internal Revenue Code.  This company's plan gives every employee an option to enroll after six months of employment. 

Samantha joined the plan 20 years ago and deposited 10% of every paycheck into her individual 401(k) account.  Under the plan's "matching" provision, Samantha's company matched every dollar she deposited with a dollar of its own. 

Samantha used to instruct her plan's administrator to invest the money in her account into an aggressive high-risk/high-reward mutual fund.  Now that Samantha is nearing retirement, she has instructed her plan administrator to invest her account balance into safer low-risk/slow-growth plan.  Samantha is relying on her 401(k) plan for financial stability after she retires.