Though not all U.S. employees have access to a 401(k), nearly 60% of workers are offered an employer-sponsored plan. If you're a self-proclaimed 401(k) newbie, here are three ways to make the most of your account.

1. Start contributing immediately

The great thing about 401(k) plans is that they come with generous annual contribution limits. Currently, anyone under 50 can put up to $18,000 a year into a 401(k), while workers 50 and older can contribute up to $24,000 a year.

A pen sits atop a 401(k) plan statement on a table.


Now if you're just starting out in your career, you probably won't manage to hit that $18,000 limit, or even come close. But if you make a point to set aside as much money as you can each month, and increase those contributions over time, you stand to amass a pretty sizable nest egg by the time you retire.

The following table shows what your 401(k) has the potential to grow to based on your savings window:

If You Start Saving $300 a Month at Age:

Here's What You'll Have by Age 65 (Assumes an Average Annual 8% Return):












Thanks to the beauty of compounding, you can turn a series of relatively small contributions into a rather impressive sum over time -- so it pays to start early. But no matter how much you start off contributing to your 401(k), be sure to put in enough to snag your full employer match. The average worker who passes up company matching dollars loses out on $1,336 a year. If you don't believe in forgoing free money, contribute whatever it takes to snag that match in full.

2. Read up on fees

It's hard to avoid fees when you're dealing with a 401(k). After all, pretty much any plan out there is bound to charge administrative fees, which can easily equal 1% of your assets under management. But while you can't do much about those automatic fees, you can do your part to keep your investment fees to a minimum.

Whenever you open a 401(k), you get a choice of where to put your money, and while your options will vary from plan to plan, most 401(k)s offer a mix of actively managed mutual funds versus passive index funds. Sticking to the latter will help you reduce your investment costs, which will leave you with more money at the end of the day.

Most Americans don't pay attention to the fees they're paying and wind up losing money in their 401(k)s year after year. In fact, more than 90% of plan participants have no idea what they're paying in 401(k) fees. Do some digging early on, and you'll avoid becoming a part of that statistic.

3. Choose investments that align with your goals

When you first enroll in a 401(k), your money will generally land in your plan's default investment option -- usually a single, specific fund. Many people who sign up for their companies' 401(k)s don't realize that they're actually supposed to choose their own investments, and as such, leave their money sitting in that default option for years on end. But that can be a costly move for two reasons -- one, because those funds aren't necessarily the most cost-effective, but also, because they don't necessarily represent the best investment strategy on an individual level.

Rather than leave your money in whatever default fund it lands in, take some time to review your investment choices, and select the ones that are most likely to help you meet your goals. For example, if you're in your early 20s with four decades or more until retirement, you can afford to get a bit aggressive with your investments. It also pays to diversify your holdings so that your money isn't all tied up in a single corner of the market. And remember those fees we just talked about? You'll want to choose specific funds that offer the best possible returns, but at the lowest possible cost.

If you're looking to make the most of your 401(k), you'll need to focus on ramping up your contributions over time, minimizing your fees, and choosing the right investments. A 401(k) isn't something you should set and forget, but if you pledge to keep tabs on your retirement plan, you'll be putting yourself in the best position to amass a healthy nest egg for the future.