Which of the following statements about 401-K plans is TRUE?

The assertion that all of the statements about 401(k) plans are true effectively captures key aspects of how these retirement savings accounts function.

Early withdrawals from a 401(k) plan indeed incur a 10% penalty if you take money out before the age of 59½, with certain exceptions (like financial hardship). This penalty serves as a deterrent against using retirement funds prematurely, ensuring that the savings are primarily used for their intended purpose—supporting individuals financially during retirement.

Additionally, 401(k) plans provide tax-deferred savings. This means that contributions made to a 401(k) are deducted from your taxable income, lowering your tax burden in the year the contributions are made. You won't pay taxes on these funds, including any earnings, until you withdraw them in retirement, which can lead to significant tax savings over time.

As for employer matching contributions, it is standard practice that these amounts must be vested, meaning that you must work with the company for a certain period before you own those matching contributions fully. This vesting schedule encourages employee retention and loyalty.

Each of these statements is accurate and reflects essential characteristics of 401(k) plans, reinforcing why the conclusion that all of the options are true is substantiated.