The term “401(k)” refers to a section of the Internal Revenue Code that allows an employee to elect to defer the receipt of, and current taxation on, a portion of current salary by contributing it to a qualified plan--a 401(k) plan. That means that each participant may elect to have a portion of their current pay placed into an account established under the plan, and that amount will grow, tax deferred, each year from investment earnings. The plan can be setup to permit Roth deferrals as well as traditional deferrals. Some 401(k) plans offer an employer matching contribution but this is not required. Also, an employer may contribute a discretionary contribution.