What is a common feature of employer-sponsored retirement plans like a 401(k)?

• A. Employer provides investment options only after 65
• B. No employer contributions are allowed
• C. Employer match up to a certain percentage
• D. Contributions are taxed away immediately

Answer: (C)

Employer-sponsored retirement plans commonly include some form of employer contribution to boost your savings, with a typical setup being a match up to a limit. This means your own contributions are complemented by the employer, often dollar-for-dollar or at a fixed percentage, up to a certain portion of your salary. The idea is to give you free money that accelerates your retirement funds, making saving through these plans much more impactful than contributing alone.

Think about it this way: if you contribute a portion of your pay and your employer agrees to match a portion of that contribution up to a cap, you effectively raise your total savings rate without extra cost beyond your own contribution. That matching feature is a hallmark of many employer-sponsored plans and a strong incentive to participate.

Why the other options don’t fit: a plan isn’t typically restricted to investment choices only after age 65, and these plans often do allow employer contributions (not having any is incorrect). Regarding taxes, contributions to a traditional 401(k) are not taxed away immediately; they reduce your current taxable income and taxes are paid when you withdraw in retirement (and some plans offer Roth options with different tax treatment).