The advent of the 401(k) plan began a major shift in the way Americans plan and save for retirement. The days of relying on traditional employer-provided pension plans as the primary source of retirement income are fast becoming extinct. In their place are 401(k) plans in which employees can save for retirement on a pretax basis and employers can better control their retirement costs because there are no minimum funding levels or guaranteed retirement benefits. Encouraging this trend, Congress passed the Pension Protection Act of 2006 (PPA). The PPA provides for automatic enrollment in 401(k) plans, changes to the rules regarding investments, and other incentives to encourage individuals to save for retirement.

Other employer-sponsored retirement plans that are similar to but simpler to administer than 401(k) plans include simplified employee pensions (SEPs) and SIMPLE Plans. These plans have specified minimum requirements and offer less design flexibility in return for simple administration.

Educational institutions and nonprofit organizations may provide 403(b) plans for their employees. Government employers may sponsor 457 plans. These plans have many of the same features and restrictions as 401(k) plans.