An employee savings plan is a type of retirement or investment program that allows workers to contribute a portion of their pre-tax earnings into a pooled account, often with matching contributions from their employer.
These plans are designed to help employees build long-term savings, typically for retirement. Common examples include 401(k) plans in the U.S. Employers may match employee contributions up to a certain percentage, effectively adding extra compensation.
Contributions are often deducted automatically from pay, and the funds are invested in various options like mutual funds or stocks, depending on the plan.
Taxes on the contributions and earnings are usually deferred until withdrawal.