<human>:  How does a 401K work?
<bot>: A 401K is a type of retirement savings plan that allows workers to contribute pre-tax money to an investment account. Contributions are usually made through regular payroll deductions and may also be matched (or partially matched) by the employer. The money grows tax-deferred, meaning that no taxes are due on the money until it is withdrawn, at which point the taxes are paid. Additionally, many 401K plans offer certain investment options, where the contribution limit can be higher and the earnings grow tax-free.