401(k) Retirement Plans
Any employer, except government entities, can offer a 401(k) plan. Here are the basics of 401(k) plans, although plan rules may vary:
Each employee participating in the plan determines how much money is to be automatically contributed from each paycheck. Generally, participants can invest an annual maximum of $18,500 in 2018, or $24,500 for those 50 or older.
The investments available in the plan — the most common options are mutual funds — are determined by the employer, who may get help from the plan's financial professional or a third-party fiduciary. Participants can decide which of the options to use.
As an added incentive for their employees to invest, some employers make “matching” contributions to participant accounts. Some employers match employee contributions dollar for dollar, while others contribute a percentage of what employees contribute. Employers may also make discretionary contributions into participant accounts.
Participants always own 100% of their salary-deferral contributions. With employer contributions, participants often become vested over time.
There are a number of options an employee can take when leaving the job:
To learn more about your options, contact your financial professional.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.