What is a key characteristic of a 401(k) plan?

A key characteristic of a 401(k) plan is that employers often match employee contributions to boost savings. This employer match is a significant incentive for employees to participate in the retirement savings plan, as it effectively increases the amount of money that can be saved for retirement without the employee having to contribute additional funds beyond their own salary deferrals.

This matching contribution varies by employer, but it is a common feature designed to encourage employees to contribute more to their retirement savings. This helps employees to take advantage of the potential growth of their savings through investments made within the 401(k) plan. The additional funds from the employer's match can significantly impact the overall retirement savings and future financial stability of employees.

In other responses, the incorrect options highlight characteristics that do not pertain to 401(k) plans. For example, the notion that 401(k) plans are offered only by banks is misleading, as they are provided by many types of employers, not just financial institutions. Additionally, the idea of unlimited withdrawals at any time contradicts the primary purpose of these plans, which is focused on long-term retirement savings, leading to penalties for early withdrawals. Finally, suggesting that a 401(k) only invests in government bonds is inaccurate, as 401(k