What Is a Defined Contribution Plan?

A defined contribution plan gives each participant an individual account. What you end up with depends on what goes in, from your own pay and from the employer, and on how the investments perform, rather than on a formula based on salary and years of service, as a traditional pension uses. 401(k) plans, profit-sharing plans, employee stock ownership plans (ESOPs) and savings plans are all defined contribution plans, and a single plan can combine several of those features. The AT&T section near the end of this page lists what public filings show about how the AT&T Retirement Savings Plan itself is set up.

How Much Can You Put Into a 401(k) in 2026?

For 2026, the IRS limit on your own 401(k) deferrals is $24,500, up from $23,500 in 2025. At 50 or older you can add an $8,000 catch-up, and if you turn 60, 61, 62 or 63 during 2026 the catch-up limit is $11,250 instead. Starting in 2026, if your prior-year wages from the plan sponsor topped $150,000, any catch-up contribution has to be made as a Roth, after-tax contribution. Counting employer money, total additions to your account for 2026 are capped at the lesser of 100% of pay or $72,000, not counting catch-ups.

How Does a 401(k) Pay Out When You Leave or Retire?

When you leave, you can generally keep the money in the plan, roll it into an IRA or a new employer's plan, take some or all of it in cash, or, if the plan offers them, set up installment payments. A direct rollover moves the money with no federal income tax withholding, while a payment made to you has 20% withheld, and you then have 60 days to redeposit the full amount, including the withheld 20%, to keep it tax-deferred. The taxable part of any cash withdrawal counts as ordinary income, and before 59 1/2 an additional 10% tax generally applies unless an exception fits, such as leaving the employer in or after the year you turn 55. Required minimum distributions generally must start at 73 if you were born in 1951 through 1959, or at 75 if you were born in 1960 or later, while Roth 401(k) money has had no lifetime RMDs since 2024.

How Is a 401(k) Divided in a Divorce?

A qualified domestic relations order, or QDRO, is a court order that assigns part of a participant's plan benefit to an alternate payee, meaning a spouse, former spouse, child or other dependent, and the plan administrator has to review the order under the plan's written QDRO procedures before it is honored. The order usually awards a percentage or a dollar amount of the account as of a set date, and many plans then hold the award in a separate account in the alternate payee's name. A payment to an alternate payee under a QDRO is exempt from the 10% early-withdrawal tax. A spouse or former spouse who receives a QDRO distribution generally owes the income tax on it and can roll it into an IRA or another plan, while a payment to a child or other dependent is taxed to the participant. Ask the plan administrator for its QDRO procedures, and any model order it provides, before an order is drafted.

What About Health Coverage When You Leave?

If you leave before Medicare, COBRA generally lets you keep your former employer's group health plan for up to 18 months, but the plan can charge up to 102% of the full premium. Medicare eligibility generally starts at 65, and your initial enrollment period runs for seven months, starting three months before the month you turn 65. Check the plan's own retiree medical rules, if any, before you set a last day of work.

Who Does the AT&T Retirement Savings Plan Cover?

Retiree medical is only one piece; the AT&T Retirement Savings Plan sets its own terms for the match, payouts and divorce. The plan (EIN 43-1301883, PN 009) held $43.1 billion for 192,505 participants, 102,760 active, in 2024. Originally a BellSouth plan, it is absorbing the ASSP's bargained participants in two 2026 steps, 60% in January and the rest in October. AT&T's 2018 plan summary sets the match at 80% of a non-bargained Basic Contribution capped at 6% of pay (100% for some groups, like Management hired since 2015), vesting after three years. If you are bargained, ask HR if a move from the ASSP changes your vesting credit.

How Does the Plan Handle Payouts and a QDRO?

At separation, the plan pays a lump sum, partial distributions, installments, or a rollover. Up to three loans can be outstanding, one for a home; year-end 2025 loan balances totaled $549.7 million at 3.25%-10.50%. Most of AT&T's match goes into AT&T stock via an ESOP; the AT&T Shares Fund in the plans' master trust held about 162 million shares at year-end 2025. Before you pick a payout, look at how much of your account sits in AT&T stock.

For a divorce, the administrator follows every QDRO under ERISA and pays the alternate payee on its terms; fee questions go to Fidelity. The newest Form 5500 lists the administrator at P.O. Box 132160, Dallas, TX 75313-2160, phone 210-886-5920, versus 210-351-3333 on the 2018 prospectus. Before mailing a QDRO or document request, confirm the plan's current phone number.