A 401(k) allows employees to choose their own investments so they can find the right balance for their retirement goals, budget, and risk tolerance. There’s no risk for the employer.
No Employer Contribution
The IRS doesn’t require employers to match employee contributions to a 401(k), although many do. According to the Bureau of Labor Statistics, the average employer match nets out to 3.5%.
Contributions by employees to a 401(k) are made with pre-tax dollars and are deductible from an employee’s taxable income. Employer match contributions are deductible, too.