What is a 401(k) plan?

A 401(k) plan is indeed a retirement savings plan that allows employees to save money for retirement while enjoying tax benefits. Contributions made to a 401(k) are typically deducted from an employee's paycheck before taxes are taken out, which means that the employee can lower their taxable income for the year in which they contribute. The funds within this plan can grow tax-deferred until withdrawal, usually at retirement age.

The benefits of a 401(k) include the potential for employer matching contributions, where the employer matches a portion of the employee's contributions, effectively increasing the total amount saved for retirement. Additionally, the compounding growth of investments in the account can significantly enhance long-term savings, due primarily to the tax-deferred growth.

This makes option B the correct choice, as it highlights both the purpose of the 401(k) and its tax-advantaged feature. Other choices do not accurately describe a 401(k) plan, focusing instead on unrelated concepts like self-employment, housing loans, and government social security programs.