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Company 401k Policies

The 401k is a type of retirement plan that companies can offer as a benefit to their employees. While all 401ks have some common rules, some of the things that affect a 401k are decided by each individual company. Things like the employer match and whether loans will be allowed are determined by the company.

401k Policies



The purpose of 401k company policies is to provide the company with some control over the plan. While every 401k works in the same basic manner, each company can make decisions for its own plan. This allows it to customize the plan to meet its own objectives as a company. Some companies need more features while others would prefer to get by with fewer.



One of the areas that a company could make a decision on is 401k loans. The 401k is a retirement account that can be borrowed against in certain cases. If an employee has money in his account, he can borrow up to 50 percent of the balance of his account, if the plan allows. This money can then be repaid over an extended period of time with interest. The company gets to decide if its plan will offer 401k loans.


Investment Options

The company may also be able to decide what types of investment options it wants for its employees. The 401k provider that the company chooses will have its own set of investment options. Then the company can choose to further narrow down the investment options if it wants.

For example, the company could choose a specific group of mutual funds that it would like its employees to invest in, but limit some of the other options.



One of the most attractive features of the 401k for many employees is the employer match. When an employee puts a certain amount of , the employer can match that amount.

This amounts to free money going into the account of the employee. While, employer matches are attractive for employees, they are not required by law. The company gets to decide how much it wants to match, if anything at all.



Companies that are setting up 401ks need to pay special attention to all of the options that they have to choose from. While the company may not want to spend any more money than it has to on the available options, it can make a big difference for employees.

When trying to attract and retain talented employees, it may be important to have a flexible retirement account option for your employees.


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