 TITLE: What Is the Difference Between a Pension and a 401(k)? CONTENT: What Is a 401(k)?\n-----------------\nA 401(k) is an employer-sponsored plan that sets aside a certain percentage of your paycheck to be invested for your retirement. In some cases, your employer may match the contributions you make up to a percentage of your annual salary, such as 3%.\nEnrollment in a 401(k) may be automatic when you start a job, but you're not required to participate. Taxes on 401(k) contributions are deferred until you pull money out of the plan, as long as withdrawals happen after you're 59½ years old.\nWorkers with a 401(k) plan are given a menu of investment options that might include company stock, individual stocks and mutual funds. Financial experts generally recommend earmarking 10% to 15% of your pretax income for your 401(k). If you're at least 40 years old, you may want to bump up that figure to 20%.\nAdvantages of 401(k)s include:\n*   You control how much or how little you contribute to a 401(k).\n*   Contributions can automatically be deducted from your paycheck before federal taxes are withheld.\n*   Taxes are deferred until you take money out of your 401(k).\n*   If you change jobs, you can take some or all of your 401(k) with you, depending on whether you're fully or partially vested.\nAmong the disadvantages of 401(k)s are:\n*   The quality and quantity of investment options may be limited.\n*   Financial advisers may be restricted from offering recommendations for 401(k) investments.\n*   Management fees can take a bite out of your investment gains.\n*   You may face a 10% tax penalty for withdrawing money before you reach age 59½. END