Final answer:
The maximum deferral amount to a 401(k) or 403(b) plan for 2018 was $18,500, which highlights the shift from traditional pensions to defined contribution plans offering tax benefits, employer matching, and investment choices.
Step-by-step explanation:
The maximum amount for 2018 that an employee may elect to defer to a 401(k) or 403(b) plan is $18,500. Defined contribution plans like 401(k)s and 403(b)s allow employees to contribute a portion of their wages to individual accounts and are an increasingly popular type of retirement plan due to their tax deferral benefits and portability. These plans often come with an employer contribution and offer a range of investment options to help the retirement savings grow over time, thus aiming to protect retirees from the inflation that can erode traditional pension benefits.