Which retirement plans allow contributions from both employees and employers?

The correct choice reflects the structure of 401(k) plans, which are designed specifically to facilitate retirement savings through contributions from both employees and their employers. In a typical 401(k) setup, employees can defer a portion of their earnings into the plan, often benefiting from tax advantages. The employer can also make contributions, generally in the form of matching contributions or profit-sharing. This dual contribution structure enhances the overall savings potential for the employee's retirement.

In contrast, options like Roth IRAs and Traditional IRAs are individual retirement accounts that only allow contributions from the account holder; there is no provision for employer-funded contributions. Mutual funds, while they can be part of a retirement fund, do not themselves involve contributions from employers or employees but are instead investment vehicles for the money that has already been contributed to retirement accounts. Therefore, 401(k) plans uniquely represent a retirement savings option that includes contributions from both employees and employers.