What constitutes a "prohibited transaction" in a 401(k) plan?

A "prohibited transaction" in a 401(k) plan refers specifically to activities that are not allowed under the Employee Retirement Income Security Act (ERISA). Using plan assets for personal benefits by fiduciaries is a clear example of a prohibited transaction. Fiduciaries have a legal and ethical obligation to manage the assets of the plan solely in the interest of the participants and beneficiaries. When a fiduciary uses plan assets for personal gain, it undermines this responsibility and can lead to significant penalties and legal consequences.

The other options represent scenarios that do not inherently violate the rules governing 401(k) plans. Reinvesting in employee stock options may be permissible under specific guidelines, and transferring assets between different types of accounts might also be allowable depending on the circumstances. Allowing participants to vote on investment changes can be part of a well-structured plan, encouraging participant engagement without constituting a prohibited transaction. Hence, the key aspect that makes the first choice correct is its direct conflict with the fiduciary duties established by ERISA.