The 401(k) plan documents outline the fees and mutual funds available to workers in the 401(k) account, as explained by United States Department of Labor. Employees can obtain these documents by contacting the Human Resources department of their company or the 401(k) plan sponsor.
401(k) plans are not the sole domain of large companies, and any company, even small businesses, can offer a 401(k) to its employees. The United States Department of Labor provides information to prospective employers on how to structure and start a 401(k) plan in addition to drafting the plan documents for dissemination to employees.
Employers need to select a brokerage to administer the plan, and there are many brokerage firms available to choose from, such as Fidelity, Schwab, Vanguard and E-trade. While there is no set rule on how to select an administrator, employers generally select 401(k) administrators on the breadth of funds offered to employees and the fees charged each year. The fees are negotiated by the employer on behalf of the employees and funds are selected by the employer to provide an array of investment options.
Contrary to a common misconception, every employee is eligible to contribute to a 401(k) plan regardless of income level. However, as of 2015, there is a maximum contribution limit of $17,500 for employees under 55 and a limit of $18,500 for employees older than 55 per calendar year, according to Practical Money Skills. Some companies offer matching benefits up to a percentage of gross annual income, but matching is not required under law. Accordingly, it is important to review and understand the 401(k) plan documents to learn what the plan's investment options are as well as any potential company match to employee contributions.