The 401(k) Plan allows eligible employees to contribute a portion of their salary to a retirement plan. Employers may choose to contribute either matching or non-elective amounts to the plan on behalf of eligible employees. Employer contributions are tax deductible for the Employer – up to 25% of compensation of all participants. Employee elective deferrals are excluded from the employee’s income for federal income tax purposes. Tax-deferred growth potential is possible – any investment earnings grow tax deferred until withdrawn from the plan.