Which of the following is characteristic of a 401k plan?

A 401k plan is characterized by the fact that investments are often held in a variety of financial products, and mutual funds are a common choice offered within these plans. Mutual funds allow individuals to diversify their investments across a mix of stocks, bonds, and other assets, which is particularly appealing for those looking to build their retirement savings with professional management of those funds.

While it is true that contributions to a traditional 401k plan are often made before income taxes, and that some plans allow for after-tax contributions for Roth 401(k) options, the defining characteristic of many 401k plans is indeed the use of mutual funds as an investment vehicle. This choice allows participants to benefit from the expertise of fund managers and access to markets that they might not be able to navigate as individual investors.

The options that assert full employer funding, tax implications on contributions, or the ability to withdraw without penalties at any age do not align with the typical features of a 401k plan. Employees typically contribute a portion of their salary to these plans, which are matched to varying degrees by their employer. Withdrawals generally incur penalties if taken before the age of 59½, reinforcing the savings aspect of the plan geared toward retirement.