Investment choices generally range from 8 to 12 options. The current average is 10.6. 401k plans may permit participant directed individual stock transactions and company stock purchase within the plan. This type of plan can permit loans and hardship withdrawals. Participants can start, stop contribution during course of year, as determined by the company.
Plans are subject to top heavy testing and discrimination testing.
Typically the amount the owners and highly compensated individuals can contribute to a 401k is a function of the contributions of the other employers. 401k plans have proven to be popular with employees for several reasons. The tax deferral is obviously high on this list of reasons. As a consequence, the plans established under section 401k have been a major factor in the restructuring of employer-sponsored retirement benefits during the 1980's and 1990's. The advent of the 401k plan, coincident with changes in employment patterns and increased Federal regulations of DB plans, influenced a decline in the relative importance of DB plans to the retirement income security of American workers.