An employee who qualifies, may elect to defer a percentage of their salary before income taxes to the savings plan.
Many plans provide a formula for an employer matching contribution to the plan.
Over the years, employees complained and in some cases sued the plan sponsor and trustees for poor investment return. In 1992, the DOL issued guidelines intending to help plan sponsors and participants cope with shifting the financial responsibility for retirement savings from employer to employee. This means a broad range of at least three investment alternatives, such as a money market, stock fund and bond fund. Allowing employees to make frequent investment changes. Providing sufficient information to make informed investment choices.