Workplace 401(k)s are popular retirement savings accounts, and with good reason. These accounts provide generous tax breaks and make saving for your future simple. In fact, some employers even auto-enroll workers in 401(k)s, so the default in these circumstances is that retirement contributions are taken out of worker paychecks unless they opt out. 

But while a 401(k) may make investing for the future easier, you still owe it to yourself to keep on top of your saving efforts and to understand how your account works. In particular, there are four big things you need to know about your 401(k). 

Piggy bank with 401(k) letters next to it.

Image source: Getty Images.

1. Is it a Roth or traditional 401(k)?

Most workplaces offer traditional 401(k) accounts, which means contributions are made with pre-tax dollars and you don't pay taxes on the money you put into the account in the year you made the contribution.

However, some jobs now also offer a Roth 401(k) as well. A Roth account works differently because contributions are made with after-tax funds. Since you don't get the up-front tax savings, it can be harder to max out your contributions. But when you invest in a Roth, you can withdraw the money tax-free in retirement. 

If you think your taxes are likely to be higher in retirement than they are now, a Roth account can be a better option. Investing in a Roth can also enable you to avoid or reduce taxes on Social Security benefits. If your company only offers a traditional 401(k) and you want the benefits of a Roth, you may want to think about investing only enough in your 401(K) to get the employer match and then opening up a Roth IRA on your own to put additional money into. 

2. What's the contribution limit?

In 2020, you can contribute up to $19,500 to your 401(k). If you are 50 or over, you're also eligible to make an additional catch-up contribution of $6,500.

Most people don't max out their 401(k)s because it would simply take too much money to do it. But if you're able to hit the contribution limits, you'll be well on your way to setting yourself up for a secure retirement. 

3. What match, if any, does your employer provide?

Employers often match a portion of worker contributions to their 401(k) accounts. For example, your company might match 50% of your contribution amount, up to a maximum match equaling 4% of your salary. 

If your employer offers a match, do everything you can to contribute at least enough to earn the entire amount. An employer match provides a guaranteed 100% return on the matched funds. It is literally free money, and you definitely don't want to pass it up.

Of course, you still have to invest the money, and there are risks associated with any investment -- but thanks to the match, you'll be starting with a larger pool of funds to invest with than you put in, so you're ahead of the game.

4. What fees are you paying?

Some 401(k)s, but not all, charge administration fees or management fees. These can add up and eat into your returns, making it harder to achieve your retirement goals. If your account provides few investment options, and if those that are available charge high fees, these costs can also affect your potential gains.

If you find yourself paying lots of fees for your investments, it may make sense to put only enough into your 401(k) to max out the employer match and then use an IRA for any additional retirement contributions.

Can you answer all of these questions?

If you can answer all of these questions about your 401(k), then you're armed with the information you need to make good decisions about investing for your future.

Now you just need to decide how much to contribute to your workplace account, and whether you should put some money into other types of retirement plans or get as close as you can to maxing out your 401(k). These decisions will affect your income as a retiree.