401(k) Plans

A 401(k) plan is an employer-sponsored retirement plan that gives employees a choice of investment options, often various mutual funds. A popular type of fund in 401(k) plans is called a target date fund. Be aware that some investment options that are held within retirement accounts are structured as collective investment trusts (CITs), which are not regulated by the SEC. For information on CITs, visit Collective Investment Funds | OCC.

Most 401(k) plans have two account options: a traditional 401(k) option and a Roth 401(k) option.  Both options offer tax advantages, either now or in the future. With a traditional 401(k), the tax benefit is upfront. With a Roth 401(k), the tax benefit comes later. You can decide how to allocate your money between these two account options as you wish, including putting some money in both. If you are over the age of 50, you may have to allocate your catch-up contributions to a Roth 401(k) option.

Traditional 401(k) Account Option

In a traditional 401(k) account, employee contributions to a 401(k) plan and any earnings from the investments are tax-deferred. You pay the taxes on contributions and earnings when the savings are withdrawn. As a benefit to employees, some employers will match a portion of an employee’s 401(k) contributions. Income taxes on matching funds also are deferred until savings are withdrawn.

Roth 401(k) Account Option

In a Roth 401(k) account, employee contributions are not tax-deferred but are made with after-tax dollars. Income earned on the account, from interest, dividends, or capital gains, and withdrawals are generally tax-free.

401(k) Rules and Regulations

The SEC does not regulate or oversee retirement plans such as 401(k) plans.

If you have a question about your retirement plan, please contact:

If you have a complaint about your plan, you can learn the procedures for filing a claim on the EBSA website.