An employee savings plan is a plan provided by an employer that allows employees to set aside a portion of their pre-tax wages for retirement savings or other long-term goals.
Your employer deducts contributions from each of your paychecks and puts that money into a designated account. In some cases, your employer may even match your contributions.
You must be a full-time worker with at least six months of net credited service to be qualified for the ESP. Employees working on temporary or contract basis are not eligible.
The most common types of employee savings plans are 401(k)s and 403(b)s, but they also include 457(b)s, TSPs, HSAs, FSAs, and others.
You don't need to set aside this money yourself, your company normally deducts your ESP payments from your paycheck each pay period.
All the money you contribute to your ESP is immediately yours. If you leave the company, you can take it with you or roll it into another account.
You will fund your ESP with tax-deferred contributions unless you choose Roth account & ESP contributions may be matched by some employers up to a certain dollar amount or percentage.