What is true about the employer's contributions to a trust under IRC requirements for a 401(k) plan?

The employer's contributions to a trust under Internal Revenue Code (IRC) requirements for a 401(k) plan are indeed subject to withdrawal limitations. This reflects the regulatory framework that governs how and when funds can be accessed in a retirement plan.

Specifically, employer contributions often come with restrictions that prevent participants from withdrawing these funds until they reach a certain age, become disabled, or meet specific employment conditions such as termination. This limitation is crucial in ensuring that the contributions serve their primary purpose of funding retirement, rather than being available for immediate withdrawal, which could undermine the financial security intended by the 401(k) structure.

This regulatory requirement aims to encourage long-term savings and discourage early withdrawals, which are not in line with the goals of retirement planning. Such limitations help preserve the funds for retirement use, reinforcing the necessity of planning for the financial future rather than accessing funds prematurely.