An increasing number of companies automatically enroll you in a 401(k) when you join the company or first become eligible. Automatic enrollment is designed to encourage you to save by taking all the effort out of signing up. Ask your HR representative whether this is the case at your company, because if you’re automatically enrolled, you participate unless you specifically opt out.

The IRS sets a contribution limit each year. In 2024 you can contribute up to $23,000 (up to $30,500 if you will be 50 or older at any time during the calendar year), as long as your contribution doesn’t exceed your earned income for the year. (Employer contributions don’t count toward that limit.) You can stay current with contribution limits at irs.gov.

One of the easiest ways to contribute more is to make the process automatic. Some 401(k) plans allow you to specify periodic, automatic contribution increases, and some employers automatically enroll employees in auto-escalation plans. Ask your plan administrator whether your plan offers automatic increases so you’re prepared for them.

401(k) plans offer investment options chosen by the plan. Having choices allows you to find investments that make sense for you. Remember, though, that investments carry different levels of risk, including potential loss of principal, and no guarantee of return, so you may want to seek advice from a professional.

Some plans allow you to contribute to both traditional and Roth 401(k)s. A traditional 401(k) offers you a tax break now by letting you contribute pre-tax money. But when you withdraw the money, that amount may be taxable. Roth 401(k)s work in reverse: You contribute after-tax dollars but when you withdraw the money in retirement that amount generally isn't taxable. Putting some contributions into a Roth 401(k) may benefit you if you expect to be in a higher tax bracket in retirement. State and local taxation rules may vary. A tax professional can help you figure this out.

According to IRS rules, typically if you withdraw money from your 401(k) before age 59½, you may be subject to income tax, including an additional 10 percent federal tax, on such amount. (There are a few exceptions; see the IRS website for details.) But some plans allow you to borrow from your account. Those loans often involve fees and, as with any loan, you have to pay interest—though in this case, generally you’re paying yourself. You don’t have to pay the early-withdrawal additional tax if you repay the loan within the designated period. Starting in 2024, you may be able to withdraw up to $1,000 from a retirement account, without owing the 10% penalty, for "unforeseeable or immediate" needs arising from a personal or family emergency. Ask your plan administrator if your plan includes this feature.

You generally can take a distribution of your account balance once you leave your company. You may be able to take a distribution (though additional taxes may apply), roll your money to an individual retirement account (IRA), convert to a Roth IRA or into a new employer sponsored retirement plan. Or you could do a combination of the choices. Knowing the rules helps you avoid surprises and develop the best plan. Each choice may offer different investment options and services, fees, expenses and rules. These are complex choices, so take time to compare options.