W2, 401 K, W4 etc in layman terms :)

Question

Hi, can anyone tell me the terms they use for various jobs W2, W4, 401K and others too! Web search does give me information, but pls explain to me in simple words , easy to understand.

I'm from India by the way and not at all aware of the employment regulations in USA.

Answer 1

W2 form is the form at the end of the year your employer gives you so you will know how much money you earned, how much of it was taken out in federal/state/fica taxes, and how much of it went to a retirement account sponsored by the company.

401K is a retirement plan that you contribute money to so that when you can legally retire, you can withdraw the money out of it

W4 is the form that you fill out where you claim the number of tax exemptions you might have so the human resource person can determine how much money to take out of your paycheck for taxes so at the end of the year you will hopefully break even instead of owing the government money or having the government hold your money for the year (they earn the interest on it instead of you, but you get the money back in the form of a refund)