How do 401(k) plans work?
A 401(k) is a retirement savings plan an employer sets up to let workers set aside part of their pay before or after tax, with the money invested and left to grow until retirement. Employees choose how much of their paycheck to defer and how to invest it among the options the plan offers, often mutual funds or target-date funds, and some plans offer collective investment trusts, which are not regulated by the 
Securities and Exchange Commission. Many employers add their own contribution on top of what the employee saves, commonly as a match tied to how much the employee puts in. The Department of Labor's Employee Benefits Security Administration, not the SEC, is the federal office that oversees how these workplace plans are run. Money in a 401(k) is meant to stay there until retirement, and the tax rules that govern contributions, growth, and withdrawals are what shape most of how the account behaves.
Traditional versus Roth contributions
Most 401(k) plans let a worker choose between two ways of contributing, and many let them split their savings between both. With a traditional 401(k), contributions come out of pay before income tax is withheld, and both the contributions and any investment earnings are taxed only when the money is eventually withdrawn. With a Roth 401(k), contributions are made with money that has already been taxed, so qualified withdrawals of both the contributions and the earnings are generally tax-free later on. Employer matching contributions are treated as traditional dollars even inside a Roth 401(k), meaning tax on the match is deferred until it's withdrawn. Workers over 50 who make catch-up contributions may, depending on their income, be required to direct those catch-up amounts to the Roth option rather than the traditional one, under the rules described for 401(k) plans on Investor.gov.
Contribution limits and employer matching
The IRS caps how much a person can defer into a 401(k) each year and adjusts that cap periodically, and a separate, higher combined limit applies to everything going into the account in a year once the employer's contributions are added in. Because these dollar limits change, anyone planning contributions for a specific year should confirm the current figures directly with their plan administrator or the IRS rather than relying on a prior year's numbers. Employer contributions, when offered, are often structured as a match — the employer contributes a certain amount for every dollar the employee defers, up to a set percentage of pay — but the exact formula, and whether the employer's contributions vest immediately or over time, is set by the individual plan document. Someone who wants to understand their own plan's matching formula, vesting schedule, or investment lineup should ask their plan administrator or human resources office, or raise the question with EBSA using the agency's online question tool.
Taking money out before retirement
Because a 401(k) is designed to fund retirement, tapping it early generally comes with a cost. Withdrawals of traditional 401(k) money are taxed as ordinary income when they're taken out, and money withdrawn before age 59 and a half is typically also subject to an additional tax on top of the regular income tax, unless it fits a specific exception. Some plans allow loans or hardship withdrawals while someone is still employed, but those features and their conditions vary by plan, so the plan document or administrator is the source for what a particular account allows. The Department of Labor Employee Benefits Security Administration can be reached at 1-866-444-EBSA (3272) for questions about a specific plan's rules or for help filing a complaint about how a plan is being administered.
Required withdrawals later in life
Once someone reaches a certain age, the IRS generally requires them to start taking annual required minimum distributions, or RMDs, from a traditional 401(k), and the amount is based on the account's prior year-end balance and the account holder's age. The Required Minimum Distribution Calculator on Investor.gov can estimate the amount due for a given year using that balance and age, and someone whose spouse is more than ten years younger should instead use the tables in IRS Publication 590-B. Full detail on how RMD rules work, including which accounts they apply to and how they compare between IRAs and workplace plans like a 401(k), is available in the IRS's RMD guidance and its comparison chart of RMD rules for IRAs versus defined contribution plans. General tax treatment of pensions and retirement plan distributions, including how a 401(k) payout is reported and taxed, is covered in IRS Publication 575.
Where to go with plan-specific questions
Because 401(k) rules differ from one employer's plan to the next — the investment menu, the match formula, the vesting schedule, and the loan or hardship provisions are all set by the plan document, not by a single federal rule — the most reliable answers about a specific account come from that plan's administrator or summary plan description. When a plan participant has a dispute with how their plan is being run, or a general question about their rights under a workplace retirement plan, the next step is to contact the Department of Labor's Employee Benefits Security Administration at 1-866-444-EBSA (3272) or through its online question form, which is the federal office responsible for enforcing the law that governs private-sector retirement plans.