What does "age discrimination" refer to in 401(k) plans?

"Age discrimination" in the context of 401(k) plans refers to plan features that disadvantage participants based on their age. This concept is important for the equitable treatment of employees in retirement plans. The Employee Retirement Income Security Act (ERISA) and the Age Discrimination in Employment Act (ADEA) prohibit age-based discrimination in employee benefits, including retirement plans.

When a plan includes provisions that negatively affect older employees or that create barriers for them based purely on their age, it is deemed to have age discrimination. For instance, if a plan offered more favorable terms for younger workers or reduced benefits as participants age, it could be seen as discriminatory. Ensuring that all participants, regardless of age, receive fair treatment in terms of contributions, vesting schedules, and benefits is essential for compliance with federal regulations and promoting a fair work environment.

The other options, while related to aspects of 401(k) plans, do not accurately capture the essence of age discrimination as defined by regulations. For example, unequal investment opportunities for younger participants or limitations on contributions may reflect other issues and are not directly indicative of discriminatory practices as specified in age-related legal frameworks.