With the world's economy seemingly spiraling into recession people are worrying more and more about security in their retirement years. With such a gloomy financial future in prospect many are turning to retirement plans for stability. There is no shortage of retirement plans out there, but the one that has carved out the best name for itself seems to be the 401K.

For those of you who don't know the 401K is a retirement savings plan made up of contributions from both the employee and the company they work for. Money invested from your salary (before tax) is allowed to grow, tax-free, until it is removed from the account. By establishing these schemes the company helps provide for its employees and helps ensure their retirement is that much more comfortable and independent.

The name "401K" is derived from the relevant Inland Revenue Code. This section (401K) lays down the regulations both sides must comply with and describes the parameters within which the scheme operates. Under these regulations the contributor benefits from tax breaks while saving towards the future. The 401K retirement plan operates under the supervision of the Employee Benefits Security Administration.

The 401K is also known as CODAP (Cash or Deferred Arrangement Plan.) This retirement plan is intended to help provide a complete financial solution for the retired person. Many people see the opportunity of a 401K retirement plan as a safety net for their later years, while many others see it as something to aspire to. In many cases employer's contributions to the 401K retirement fund will equal that of the employee.

Some companies also make payments independently of the employee's contributions. These payments usually come in the form of profit sharing bonuses. Other employers go a step further and offer advice and direction regarding investing the retirement fund in the stock market or in the company itself.

For legal reasons the U.S. government is prohibited from offering the 401k retirement plan to its own employees, but tax exempt organizations, private businesses and other companies may set up their own plans for all eligible employees. Why should you take up the opportunity of a 401K retirement plan? Well, there are many reasons why it might be beneficial to you.

• All contributions paid in come from un-taxed income

• The taxable amount of each pay check is lowered every month

• You have total control over where these investments are directed

• The plan is extremely flexible and made to fit in with a modern lifestyle, so, if you move jobs, the investment plan moves with you

• This fund has security like no other

To sum it up, the 401K investment plan is really what is required for peace of mind and financial security in your later years. Not only do you reap the rewards after you retire, it also gives you tax breaks while you are still at work. No wonder the 401K is more popular than any other retirement plan!