For 2024, the 401k contribution limit is $23,000 for employees under 50. Those 50 and older can make additional catch-up contributions of $7,500, bringing their total limit to $30,500. These limits are set by the IRS and typically increase annually with inflation.

Employer matching is essentially free money added to your 401k. Common formulas include dollar-for-dollar matching up to a certain percentage (e.g., 100% match on first 3% you contribute) or partial matching (e.g., 50 cents for every dollar up to 6%). Always contribute enough to get the full match - it's an immediate 100% return on your investment.

Traditional 401k contributions are made with pre-tax dollars, reducing your current taxable income, but withdrawals in retirement are taxed. Roth 401k contributions are made with after-tax dollars (no immediate tax benefit), but qualified withdrawals in retirement are completely tax-free. Choose Traditional if you expect to be in a lower tax bracket in retirement, or Roth if you expect higher taxes later.

Generally, you can withdraw from your 401k penalty-free starting at age 59½. Early withdrawals before this age typically incur a 10% penalty plus income taxes. However, there are some exceptions for hardships, first-time home purchases, medical expenses, and if you separate from service after age 55. Required minimum distributions (RMDs) must begin at age 73.

Catch-up contributions allow individuals age 50 and older to contribute an additional $7,500 to their 401k in 2024, beyond the standard $23,000 limit. This provision helps older workers boost their retirement savings as they approach retirement. You must already be contributing the maximum regular amount to be eligible for catch-up contributions.

When you leave a job, you have several options: 1) Leave the money in your former employer's plan (if allowed), 2) Roll it over to your new employer's 401k, 3) Roll it over to an IRA, or 4) Cash out (not recommended due to taxes and penalties). Rolling over preserves the tax-advantaged status and keeps your retirement savings growing.

Many 401k plans allow loans up to 50% of your vested balance or $50,000, whichever is less. You typically have 5 years to repay (longer for home purchases). While you pay interest to yourself, you miss out on potential investment growth. If you leave your job, the loan usually becomes due immediately, or it's treated as a taxable distribution.

Vesting determines how much of your employer's contributions you get to keep if you leave the company. Your own contributions are always 100% vested. Employer contributions may vest immediately, gradually over several years (graded vesting), or all at once after a certain period (cliff vesting). Common schedules include 3-year cliff or 6-year graded vesting.

Your investment strategy should align with your age, risk tolerance, and retirement timeline. Generally, younger investors can afford more aggressive growth investments (stocks), while those closer to retirement should shift toward more conservative options (bonds). Many plans offer target-date funds that automatically adjust this mix as you age. Diversification across different asset classes is key.

401k fees include administrative fees, investment management fees (expense ratios), and sometimes individual service fees. Even small differences in fees can significantly impact your long-term returns due to compounding. Look for low-cost index funds when available. A 1% difference in annual fees can cost tens of thousands of dollars over a career.

If you can afford it, maxing out your 401k is generally beneficial due to tax advantages and compound growth. However, first ensure you: 1) Get the full employer match, 2) Have an emergency fund, 3) Pay off high-interest debt. If you can't max out immediately, increase your contribution by 1-2% annually or whenever you get a raise.

Auto-enrollment automatically enrolls eligible employees in the 401k plan at a default contribution rate (usually 3-6%) unless they opt out. This has significantly increased participation rates. Many plans also include auto-escalation, which automatically increases your contribution rate annually. You can always adjust your contribution rate or investment choices after enrollment.

Traditional 401k contributions reduce your current taxable income dollar-for-dollar, potentially dropping you into a lower tax bracket. For example, if you earn $75,000 and contribute $10,000, you're only taxed on $65,000. This provides immediate tax savings, but remember that withdrawals in retirement will be taxed as ordinary income.

Even without employer matching, a 401k still offers valuable tax advantages and higher contribution limits than IRAs. You might consider contributing enough to get tax benefits, then maximizing an IRA (which often has better investment options and lower fees) before returning to contribute more to your 401k. The tax deferral alone makes it worthwhile for most people.

Starting at age 73, you must begin taking Required Minimum Distributions from your traditional 401k. The amount is calculated based on your account balance and life expectancy. Failure to take RMDs results in a hefty 50% penalty on the amount you should have withdrawn. Roth 401ks also have RMDs, but you can avoid them by rolling over to a Roth IRA.