It’s taken just over a generation for the 401(k) and similar 403(b) and 457 defined-contribution plans to become the bedrock of working America’s retirement goals. Nearly 80% of all workers who hold down full-time jobs have access to the 638,390 plans now in operation. That’s opened the door for nearly 89 million participants to put aside a tax-deferred $3.8 trillion toward retirement.

The upshot of the revolution is this: A defined-benefit pension no longer controls your retirement savings – you do. You’re shouldered with the responsibility of figuring out how to make your money last 25 or more years, beginning with how much to set aside and how to invest it. So how do you get the most out of your account?

Below are four steps to help prime your 401(k) so it best meets your retirement goals. They will help you (1) take advantage of key features; (2) find out more about your plan’s inner workings to help guide your decisions; and (3) set a course of action and stick to it.

Step I: Contribute.

If you're reading this article, you've probably already cleared hurdle one by signing up for a defined-contribution retirement plan. The money you personally contribute – up to this year’s limit of $17,500 ($23,000 if you’re over 50) – comes out of your salary, which lowers your tax bill come April 15. The money you set aside will presumably grow over time. Taxes on the gains are levied when you tap into the funds later. What’s more, a number of employers go a step further to sweeten the deal by making matching contributions.

While boosting the money you put into your 401(k) comes off as an obvious first step, it’s not quite the no-brainer it might seem. In a 2013 survey, the American Benefits Institute reported that while employee participation was 70% or greater at the majority of companies that responded, fewer than 10% of the employees enrolled elected to contribute the maximum they could. What’s more, 34% of the participating companies believed that more than half of their employees were not contributing enough to their 401(k) to qualify for their company's full employer match.

Action plan: Check in with your benefits manager to get up to speed on your employer’s matching offers and any automatic deductions from your paycheck. Look to set aside enough 401(k) contributions to trigger your employer’s maximum match – that’s essentially a free boost to your salary that you can’t afford to turn down. If you need further incentive, it might help to know that experts set 10% as a rule of thumb for how much of your income you should set aside for retirement – and suggest as much as 15% to get on track if you've been contributing less or need to bounce back from setbacks, such as the 2008 recession. It helps that some companies enroll employees for automatic contributions, which may lift incrementally every year, but it's best if you opt in for the largest amount you can afford.

Step II. Know what you’re paying and compare fees.

It costs money to run a 401(k) plan – a hefty tab that generally comes out of your investment returns. Consider the following example posted by the Department of Labor. Say you start with a 401(k) balance of $25,000 that generates a 7% average annual return over the next 35 years. If you pay 0.5% in annual fees and expenses, your account will grow to $227,000. Up the fees and expenses to 1.5%, however, and you’ll end up with only $163,000 – effectively handing over an additional $64,000 to pay administrators and investment companies.

It helps to know that the business of running your 401(k) generates two sets of bills – plan expenses, which you cannot avoid, and fund fees, which hinge on the investments you choose. The former pays for the administrative work of tending to the retirement plan itself, including keeping track of contributions and participants. The latter includes everything from trading commissions to paying portfolio managers' salaries to pull the levers and make decisions.

Action plan: Closely compare the investment offerings available in your 401(k). In some instances, you may be able to choose how much you pay to invest in the stock or bond markets. If you opt for well-run index funds, you should look to pay no more than 0.25% in annual fees, says Morningstar editor Adam Zoll. By comparison, a relatively frugal actively managed fund could charge you 1% a year.

Step III: Plan to diversify and stick with it.

You probably already know that spreading your 401(k) account balance across a variety of investment types makes good sense. Diversification helps you capture returns from a mix of investments – stocks, bonds, commodities and others – while protecting your balance against the risk of a downturn in any one asset class.

“It starts with figuring out your risk tolerance; picking an asset-allocation approach you can live with during up and down markets,” says Stuart Armstrong, a Boston financial planner with Centinel Financial Group. “After that, it’s a matter of fighting the temptation to market time, trade too often or think you can outsmart the markets. Review your allocations periodically, perhaps annually, but try not to micromanage.”

Action plan: Start by saying "no" to company stock: The move concentrates your 401(k) portfolio too narrowly and increases the risk that a bearish run on the shares could wipe out a big chunk of your savings. Vesting restrictions may also prevent you from holding on to the shares if you leave or change jobs, making you unable to control the timing of your investments.

For help in diversifying, it might make sense to move assets into a target-date fund, which selects a market basket of investments based on risk tolerance and when a group's investors are targeted to retire. This allows you to leave decisions on how to divvy up your 401(k) savings and make periodic adjustments based on the market, and how close you are to retirement, in the hands of a money manager. For more information, see An Introduction to Target Date Funds and Who Actually Benefits From Target Date Funds? A second possibility is to enlist the help of the company that manages your plan or a financial planner. In both cases, you’ll want to settle on an asset allocation that helps you grow your account. Finally, if your 401(k)’s offerings seem limited, you might want to roll it over into an IRA when you reach age 59 ½, says Washington, D.C., financial planner Ivory Johnson. “That opens a world of choices including mutual funds, stocks, bonds and ETFs.”

Step IV: Keep your hands off.

Borrowing against 401(k) assets can be tempting if times get tight. However, doing this effectively nullifies the tax benefits of investing in a defined-benefit plan since you’ll have to repay the loan in after-tax dollars. On top of that, you may be assessed fees on the cash.

“Resist, resist, resist the option,” says Armstrong. “The need to borrow from your 401(k) is typically a sign that you need to do a better job of planning out a cash reserve, saving, or cutting spending and budgeting for life goals.”

The Bottom Line

With your employer making contributions and managers there to handle investing, it’s easy to take a passive approach to 401(k)s. Don’t: With a bit of study and planning, along with the right help, you can capitalize on a chance to mold a comfortable retirement.

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