Which best describes the purpose of a 401(k) plan?

The primary purpose of a 401(k) plan is to save for retirement while deferring taxes. This retirement savings plan allows employees to contribute a portion of their salary before taxes are taken out, which helps lower their taxable income for the year. The funds in a 401(k) grow tax-deferred, meaning that no taxes are paid on the earnings until the money is withdrawn, typically during retirement when individuals might be in a lower tax bracket. This tax deferral not only encourages individuals to save for their future but also potentially increases the amount of money available at retirement due to compounding growth.

In contrast, other choices describe purposes that do not align with a 401(k) plan. For instance, immediate cash flow is typically associated with other financial products or accounts meant for liquidity rather than long-term growth. Financing college education costs is better served by other savings plans, such as a 529 plan. Lastly, a 401(k) does not guarantee a specific return on investment, as the returns depend on the performance of the investment options chosen within the plan. Thus, option B accurately captures the essence of a 401(k) plan's function as a retirement savings vehicle with tax advantages.