Final answer:
Mutual funds are the most common investment choice for 401(k) plans, offering diversification and professional management to help mitigate investment risks.
Step-by-step explanation:
The most common investment choice for 401(k) plans is B. Mutual funds. 401(k)s are defined contribution plans where both the employer and employee contribute money, which the employee then invests in various vehicles. Mutual funds are popular in 401(k) plans because they provide an efficient way to gain diversified exposure to stocks, bonds, or other investment categories. By putting money into mutual funds, participants benefit from professional management and diversification, which can mitigate risk compared to investing in individual stocks or bonds.
The choices of investments in a 401(k) can typically include a mix of asset classes such as stocks, bonds, and money market funds, but mutual funds are often the primary vehicle because they allow investors to spread risk across various securities. This tie into the concepts of risk and diversification, crucial considerations in retirement planning.