as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.
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name one benefit of setting up a 401 (k) plan.
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one benefit of setting up a 401(k) plan is the potential to reduce your federal income tax liability by deferring taxes on the contribution and earnings until they are withdrawn. this can be beneficial in the long run, as earnings grow tax-free until withdrawal. additionally, an employer may be able to match contributions or provide its own contributions to the 401(k) plan. this is beneficial for employees, as it is essentially free money for retirement.
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