Select your state

Employment law

retirement plans—401k plans

A 401(k) is a feature of a qualified profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts. Some of the key features of 401k plans are:

• Elective salary deferrals are excluded from the employee’s taxable income (except for designated Roth deferrals).

• Employers can contribute to employees’ accounts.

• Distributions—including earnings—are includible in taxable income at retirement (except for qualified distributions of designated Roth accounts).

In Michigan, as in all states, a 401(k) plan is governed by federal law, specifically the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. Employees in Michigan can elect to defer a portion of their salary into their 401(k) plan, which reduces their current taxable income, except in the case of Roth 401(k) contributions, which are made post-tax. Employers have the option to make contributions to their employees' 401(k) accounts, which can be in the form of matching contributions, non-elective contributions, or profit-sharing contributions. Upon retirement or when the employee takes distributions from the plan, the funds, including any earnings, are subject to federal income tax, unless the funds are from a Roth account and the distribution is qualified. It's important to note that while the 401(k) is a federal program, Michigan state tax laws generally conform to federal tax treatment of 401(k) contributions and distributions.

Legal Articles

State Statutes

Individual & Family Legal Plan

As a LegalFix member, you'll get expert legal services from a local law firm that treats you like an important client. Don't wait—be prepared for life's inevitable legal challenges starting today. And ask your employer, credit union, or membership group about preferred pricing opportunities.

Employment law

retirement plans—401k plans

Individual & Family Legal Plan

Articles

Michigan State Code

Michigan State Code

Employment law

retirement plans—401k plans

Articles