Final answer:
A $200 Cash Christmas Bonus is not a source that contributes to the annual additions of a 401(k) plan. Contributions to a 401(k) typically come from employer matches, deposits from forfeitures, and Qualified Non-Elective Contributions, while personal gifts are excluded.
Step-by-step explanation:
The maximum amount that may be allocated to a 401(k) account in the current year from various sources does not typically include personal gifts such as cash bonuses unrelated to the employer's contribution structure. Employer matching contributions, forfeitures from departing non-vesting employees, and Qualified Non-Elective Contributions (QNEC) are all common ways that funds can be added to a 401(k). However, a $200 Cash Christmas Bonus received from someone other than the employer does not count towards the annual additions to a 401(k) plan as defined by the IRS. Defined contribution plans like 401(k)s and 403(b)s have become prevalent as they offer a tax-deferred, portable retirement saving option. Contributions to these plans come from fixed amounts deposited by the employer, often matched by employee contributions, which are then invested. Retirees benefit from potential real rates of return on these investments, safeguarding them against inflation unlike traditional pensioners.