Retirement plans have often been used by employers as another element of an employees' compensation. One of the first kind of plans was known as a 'defined benefit' plan. These plans guaranteed a monthly payment to retirees. These plans are mostly a thing of the past. In the early 1980's, the 401(k) plan was added to the tax code. The new laws allowed individuals to contribute to an employee-sponsored plan on a pre-tax basis. Over the years, employers have done away with pension plans and instead have moved to 401(k) plans. For many Americans, 401(k) plans are their only option and that means it's even more important to know how far their 401(k) plan really goes to helping them save for retirement.
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