Can i buy individual stocks in my 401k

A k is a type of retirement plan that allows employees to contribute before-tax dollars into an account that builds until they reach retirement age. The choices you can make regarding what to do with your money are determined by your specific plan. In most k plans, participants are given a list of three to seven different options from which to choose.

These are typically a mix of stocks and bonds and are designed to provide the investor with a range of choices including everything from slow, steady growth to a rapid accumulation of money.

Each type of investment has its risks as well as benefits, and it is the responsibility of the plan administrator to make sure participants understand the potential hazards of each type of investment. The IRS places restrictions on the investment choices you or your plan administrator can make.

You are not allowed to invest in such things as art, gems or antiques.

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There are also restrictions on some types of coins and precious metals. Investing in alcoholic beverages is not allowed.

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Additional limits are placed on employer-owned property and company stock that can be included as part of the investment. The intent is to protect investors from potentially questionable investments.

The plan administrator is responsible for setting up the k plan according to government guidelines. Part of this is to make sure the plan obeys all applicable rules and regulations, but it also involves the administrator making prudent and cautious selections of the properties and securities in which the plan invests.

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The Employee Retirement Income Security Act of , known as ERISA, says that the administrator must exercise the level of judgment he would use if the investments were his own.

Provided he meets these requirements, neither the plan administrator nor the company will be held responsible if the k investments lose money.

In virtually all cases, you are allowed to choose your investments from a list of choices that the plan provides, but this does not include allowing you to select individual stocks. Since plan specifics vary greatly, check the details of your k plan for information on what your choices are.

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Basics In most k plans, participants are given a list of three to seven different options from which to choose. Restrictions The IRS places restrictions on the investment choices you or your plan administrator can make. Individual Choices In virtually all cases, you are allowed to choose your investments from a list of choices that the plan provides, but this does not include allowing you to select individual stocks.

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