🕷️ Crawler Inspector

URL Lookup

Direct Parameter Lookup

Raw Queries and Responses

1. Shard Calculation

Query:

Response:

Calculated Shard: 148 (from laksa175)

2. Crawled Status Check

Query:

curl -X POST \
  'http://laksa148.int.ahrefs:8124/' \
  -H 'Content-Type: text/plain' \
  -H 'X-ClickHouse-Database: crawler3' \
  -H 'Authorization: Basic YXBpOg==' \
  -d 'SELECT getAhrefsURLFromUnparsed(src_unparsed) AS found_url, ifNull(toUnixTimestamp(download_stamp), 0) AS crawl_time, ifNull(toUnixTimestamp(props_url_first_seen), 0) AS first_indexed_time, download_http_code AS http_code, src_unparsed AS src_unparsed, src_root_hash AS src_root_hash, history_drop_reason AS history_drop_reason, meta_title AS meta_title, meta_descriptions AS meta_descriptions, attrs_boilerpipe_text AS attrs_boilerpipe_text, attrs_markdown AS attrs_markdown, attrs_readable_markdown AS attrs_readable_markdown, meta_canonical AS meta_canonical FROM crawler3.page_info_local FINAL PREWHERE (src_root_hash, src_unparsed) IN ((getAhrefsRootHashFromUnparsed(getAhrefsUnparsedNoserviceFromURL(\'https://www.bankrate.com/retirement/401k/\')), getAhrefsUnparsedNoserviceFromURL(\'https://www.bankrate.com/retirement/401k/\'))) FORMAT JSONEachRow'

Response:

{"found_url":"https:\/\/www.bankrate.com\/retirement\/401k\/","crawl_time":1775534840,"first_indexed_time":1587759649,"http_code":200,"src_unparsed":"com,bankrate!www,\/retirement\/401k\/ s443","src_root_hash":"16841441868536461148","history_drop_reason":null,"meta_title":"What Is A 401(k) Retirement Plan? | Bankrate","meta_descriptions":["If you’re working and saving for retirement, educating yourself on how investing in a 401(k) plan works and how it can help you build a sizable nest egg makes good financial sense.","If you’re working and saving for retirement, educating yourself on how investing in a 401(k) plan works and how it can help you build a sizable nest egg makes good financial sense."],"attrs_boilerpipe_text":"Key takeaways\nA 401(k) plan is a tax-advantaged way to invest for retirement, often with employer contributions.\nYou should at least contribute enough to get your employer’s full match — otherwise you’re leaving money on the table.\nInvestment options vary by plan, so you’ll need to evaluate costs, risk and asset mix.\nOnce you set up your 401(k), you’ll have money contributed automatically from your paychecks and invested in the funds you’ve selected.\nRules around loans, early withdrawals and required minimum distributions can result in hefty penalties and fees if you’re not paying attention.\nIf you’re working and already saving for retirement or plan to start socking away money soon, investing in a 401(k) plan can help you build a sizable nest egg.\nIf you’re thinking about signing up for a 401(k), or simply want to know more about how to take full advantage of this\ntype of retirement plan\n, here’s everything you need to know.\nWhat is a 401(k) plan and how does it work?\nA 401(k) plan is a tax-advantaged retirement savings tool offered by employers that allows eligible employees to contribute a portion of their salary up to a set amount each year.\nUnlike traditional pension plans, in which the employer promises a specified monthly benefit at retirement, 401(k) plans are funded by contributions deducted directly from the employee’s paycheck. Many companies match contributions up to a certain percentage of your annual salary.\nGetting started with a 401(k)\nWhile 401(k) plans are broadly similar, each employer’s plan can differ in important ways, such as whether you can take a loan against your savings or the types of investments available. Here are some key things to understand about your plan as you get started:\nWhat are your company’s eligibility requirements and will you automatically be enrolled in the plan?\nWill the plan automatically increase your contribution each year?\nDoes your company offer a matching contribution and how much is it?\nWhat investment options does the plan offer? What do they cost and are those funds expensive relative to other available options?\nDoes the plan offer any third-party advice (such as from the plan’s administrator) or any option to have the account managed for you?\nCan you invest in individual securities or do you have to stick to the funds provided in the plan?\nCan you take a loan against your account balance? How much does the loan cost?\nThese are a few of the most important questions that you’ll want to answer as you get started with your 401(k). Don’t assume that all plans are alike, because your employer may change important aspects of the plan — even beyond the basics, such as its matching contribution.\nHow much should you contribute to your 401(k)?\nWhen it comes to how much of your pay you should contribute, everyone has different financial needs in retirement, but there are some general rules you can follow.\nContribute enough to take advantage of any matching dollars offered by your employer, says Catherine Golladay, former managing director at Charles Schwab.\nWhether your company match is dollar-for-dollar or something smaller, such as 50 cents on the dollar, don’t pass up the match. “Not doing so is like leaving money on the table,” she says.\nAfter saving enough to get the full employer match, Golladay suggests paying off high-interest debt and\nbuilding an emergency fund\n. Then, go back and maximize tax-advantaged retirement accounts, either the 401(k) or retirement accounts, such as an\nindividual retirement account (IRA) or Roth IRA\n.\nAbout 70 million Americans invest in 401(k)s and these retirement plans hold $8.9 trillion in assets, according to the\nInvestment Company Institute\n, citing data as of Sept. 30, 2024. Plan participants can roll up substantial savings over the years of their working lives.\nHere’s how much the average American has in a 401(k) by age\n.\nSavings Icon\nContribution limits for 401(k) plans\nIn 2025, the IRS lets you contribute up to $23,500 to your 401(k). If you’re age 50 or older, you can add a $7,500 catch-up contribution. Employer matching doesn’t count toward this limit, so the total can be even higher.\nThese limits typically go up every year to keep pace with inflation, so check annually to see if you can stash away more money.\nHow employer matching works\nEmployer matching is one of the biggest perks of a 401(k). If it’s offered at your job, your employer agrees to\nmatch a portion of your contributions\n. For example, they might match 100 percent of your contributions up to 4 percent of your salary.\nSome employers use a partial match — 50 percent of your contributions up to 6 percent of your salary, for example.\nBut there’s a catch. You may need to stay with the company for a few years to fully “own” the match.\nThis is called vesting.\nSome employers vest you immediately, while others make you wait a year or longer.\nAs Golladay notes, getting that company match is essentially free money. Always contribute at least enough to get the full match, even if you can’t max out your account.\nInvesting options for 401(k)s\nMost 401(k) plans have at least three investment choices, though others offer many more options. The average plan offers about 28 investment options, according to the Investment Company Institute.\nThe menu could include a mix of investments, such as mutual funds, company stock and index funds, as well as stable value funds (or cash), bond funds and so-called “target date” funds, which adjust your portfolio based on your years until retirement.\nFortunately, while you can pick your own funds if you’re the do-it-yourself type, you often don’t have to decide how to invest completely on your own.\n“Many of today’s 401(k) plans include professional investment advice, which can be key in helping the participant make investment decisions based on their overall financial picture,” Golladay says.\nTarget-date funds\n(TDFs) have become popular options because they automatically adjust the mix of investments over time to align with investors’ risk tolerance as they approach retirement. For example, they move money from higher-risk stock funds to lower-risk bond funds as you near retirement, so that you have a more stable portfolio when you need the money.\nWhile target-date funds meet many investors’ demands, they don’t fit every individual’s needs.\n“While a TDF can be effective, a more tailored portfolio based on multiple data points about the investor may be the best option for some,” Golladay says.\nHere are\nother ways that you can maximize your 401(k)\nover time and generate higher returns.\nHow to choose investments for your 401(k)\nHere are some smart moves to make with your 401(k), including how to earn a higher return by being aggressive with your investments and when not to:\nDesign your investments with your age in mind.\nAvoid being too conservative\nwhen you’re younger and\ntoo aggressive when you’re old\n. If you’re in your 20s or 30s, you can afford to be more aggressive with your investments — investing more or all of your money into potentially higher-returning stocks or stock funds — because you have more time to recover from any market slumps along the way. As you age, however, your asset allocation should shift to more conservative investments — bonds or bond funds — to help protect your portfolio from the volatility of stocks.\nIndex funds\n, such as those based on the S&P 500 index, are a good all-around pick for the stock portion of your portfolio. They’re a\ntop recommendation from legendary investor Warren Buffett\n.\nUse any tools offered by your 401(k) provider. Many 401(k) plans offer tools (online calculators, worksheets) for determining risk tolerance and suitable investment options.\nIf you’re not comfortable selecting funds or building an investment portfolio on your own, the best tool may be a competent\nfinancial advisor\n. Select an advisor who can design a long-term plan for you and help you stick to it —\nhere’s how to find one\n.\nTime is your most important ally when investing for retirement. It’s less important to find the very best investment than it is to find a good investment and then buy and hold it for years, if not decades.\nBefore you can decide how to allocate your contributions, determine your risk tolerance. It’s critical to know how well you can deal with volatility in your portfolio. You want to make sure you can sleep at night if financial markets turn turbulent and asset prices fall. But keep in mind that markets historically have recovered even after\nbrutal bear markets\n, or stock market declines of 20 percent or more, which are typical during recessions.\nLightbulb Icon\nBankrate’s\n401(K) calculator\ncan help you estimate your savings over time.\nWhy should you invest in a 401(k)?\nA 401(k) is an excellent investment option, and everyone should consider opening an account if they’re able to. Not all employers offer a 401(k) retirement plan, but if yours does, it’s a smart move to participate in one for the following reasons:\nTax advantages\nA 401(k) lets you invest on a pre-tax basis, meaning you can take a tax break on this year’s taxes. You’ll be able to grow your assets tax-deferred until you withdraw them at retirement, when you’ll owe tax at ordinary income rates. A\nRoth 401(k)\nalso offers tax benefits, but you’ll contribute money on an after-tax basis and enjoy tax-free withdrawals in retirement.\nMatching contributions\nMany employers offer free matching money if you contribute to your plan. You may be able to rake in an extra 3 or 4 percent of your salary this way, and it’s a risk-free return, though some plans require a few years for the match to vest.\nAutomatic investments\nOnce you set up your 401(k) investment plan, you’ll have money contributed automatically from your paychecks and invested in the funds you’ve selected.\nAttractive investments\nMany 401(k) plans offer historically high-return investments such as stocks or stock funds, so you’re likely to earn much more than you could in a traditional bank account over time.\nStill, some investors are worried about investing in stocks because of their riskiness.\n“All investments come with risk, but the fear of losing money should not inhibit someone from utilizing a 401(k),” Golladay says.\nWhile markets go up and go down, history has shown that over the long run, they move up. As measured by the\nS&P 500 index\n, over time stocks returned around 10 percent annually. The S&P 500 comprises hundreds of America’s largest publicly traded companies.\nThat’s why investors, especially the risk-averse, should take a long-term approach to their retirement investments.\n“In times of market volatility or uncertainty, it’s important to remember that panic isn’t a strategy, especially with an investment as long-term in nature as a 401(k),” Golladay says.\n401(k) loans: What they are and how they work\nIf you need cash for an emergency or to pay down debt, your 401(k) plan may allow you to take out a loan and borrow up to 50 percent of your vested balance, but not more than $50,000.\nIn most cases, you have to repay the money with interest within five years. While the interest payments go into your account — which means you are paying yourself back rather than giving your money to a bank — there are significant downsides.\nWhen you make a 401(k) withdrawal, that money is no longer invested in the market, and therefore, you could miss out on gains if asset prices continue to rise. Also, the original contributions to the account were made with pre-tax dollars, but the loan payments will be made with after-tax dollars. So, you’re losing a key tax benefit here.\nIf you leave your employer, you’ll also have to repay your loan faster, generally when taxes are due for the current tax year.\nTry to avoid taking a\n401(k) loan\nif at all possible, though it may be better than taking an early withdrawal.\n401(k) FAQs\n— Bankrate’s\nRachel Christian\ncontributed to an update.\nDid you find this page helpful?\nInfo Icon\nHelp us improve our content","attrs_markdown":"[Skip to Main Content](https:\/\/www.bankrate.com\/retirement\/401k\/#main-content)\n\n{closeNav(); \\$refs.siteNavMenuButton.focus();}\"\\>\n\n- [Banking](https:\/\/www.bankrate.com\/banking\/)\n  All\n  \n  Banking\n  \n  Checking & savings\n  \n  CDs\n  \n  Money market\n  \n  Banks\n  \n  [Explore all banking resources](https:\/\/www.bankrate.com\/banking\/)\n  \n  Banking\n  \n  Compare accounts\n  \n  - [Best high-yield savings accounts](https:\/\/www.bankrate.com\/banking\/savings\/best-high-yield-interests-savings-accounts\/)\n  - [Best checking accounts](https:\/\/www.bankrate.com\/banking\/checking\/best-checking-accounts\/)\n  - [Best free checking accounts](https:\/\/www.bankrate.com\/banking\/checking\/best-free-checking-accounts\/)\n  \n  Get guidance\n  \n  - [Savings calculator](https:\/\/www.bankrate.com\/banking\/savings\/simple-savings-calculator\/)\n  - [All savings calculators](https:\/\/www.bankrate.com\/banking\/calculators\/)\n  - [Savings rate trends](https:\/\/www.bankrate.com\/banking\/savings\/average-savings-interest-rates\/)\n  - [Savings resources](https:\/\/www.bankrate.com\/banking\/savings\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/6efbd0a01f\/savings-basics.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Savings basics 5 min read](https:\/\/www.bankrate.com\/banking\/savings\/how-to-open-a-savings-account\/)\n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/4c26764452\/how-to-start-saving.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) How to start saving 4 min read](https:\/\/www.bankrate.com\/banking\/savings\/start-saving-from-scratch\/)\n  \n  Compare accounts\n  \n  - [Best CD rates](https:\/\/www.bankrate.com\/banking\/cds\/cd-rates\/)\n  - [Best 6-month CD rates](https:\/\/www.bankrate.com\/banking\/cds\/best-6-month-cd-rates\/)\n  - [Best 1-year CD rates](https:\/\/www.bankrate.com\/banking\/cds\/best-1-year-cd-rates\/)\n  - [Best 5-year CD rates](https:\/\/www.bankrate.com\/banking\/cds\/best-5-year-cd-rates\/)\n  \n  Get guidance\n  \n  - [CD calculator](https:\/\/www.bankrate.com\/banking\/cds\/cd-calculator\/)\n  - [CD ladder calculator](https:\/\/www.bankrate.com\/banking\/cds\/cd-ladder-calculator\/)\n  - [CD resources](https:\/\/www.bankrate.com\/banking\/cds\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/a7b9c5207a\/cd-basics.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) CD basics 7 min read](https:\/\/www.bankrate.com\/banking\/cds\/what-is-a-cd\/)\n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/4b0ced533f\/how-to-invest-with-cds.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) How to invest with CDs 6 min read](https:\/\/www.bankrate.com\/banking\/cds\/how-to-invest-in-cds\/)\n  \n  Money market accounts\n  \n  Money market accounts are similar to savings accounts, but offer some checking features as well.\n  \n  [View MMA rates](https:\/\/www.bankrate.com\/banking\/money-market\/rates\/)\n  \n  Get guidance\n  \n  - [Money market basics](https:\/\/www.bankrate.com\/banking\/mma\/what-is-a-money-market-account\/)\n  - [Money market vs savings accounts](https:\/\/www.bankrate.com\/banking\/money-market-account-vs-savings-account\/)\n  - [How to open an MMA](https:\/\/www.bankrate.com\/banking\/mma\/how-to-open-a-money-market-account\/)\n  - [MMA resources](https:\/\/www.bankrate.com\/banking\/mma\/)\n  \n  Banking\n  \n  Unlock financial rewards by signing up for a savings or checking account with a bonus offer.\n  \n  [Best bank bonuses](https:\/\/www.bankrate.com\/banking\/best-bank-account-bonuses-and-promotions\/)\n  \n  Get guidance\n  \n  - [Best online banks](https:\/\/www.bankrate.com\/banking\/best-online-banks\/)\n  - [Best credit unions](https:\/\/www.bankrate.com\/banking\/best-credit-unions\/)\n  - [Bank reviews](https:\/\/www.bankrate.com\/banking\/reviews\/)\n  - [Federal Reserve news](https:\/\/www.bankrate.com\/banking\/federal-reserve\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/d50369eb56\/capital-one-review.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Capital One review Our take on Capital One Bank](https:\/\/www.bankrate.com\/banking\/reviews\/capital-one\/)\n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/d121fa8bad\/marcus-review.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Marcus review Our take on Marcus by Goldman Sachs](https:\/\/www.bankrate.com\/banking\/reviews\/marcus\/)\n  \n  [Explore all banking resources](https:\/\/www.bankrate.com\/banking\/)\n- [Mortgages](https:\/\/www.bankrate.com\/mortgages\/)\n  All\n  \n  Mortgages\n  \n  Purchase\n  \n  Refinance\n  \n  Real estate\n  \n  [Explore all mortgages resources](https:\/\/www.bankrate.com\/mortgages\/)\n  \n  Mortgages\n  \n  Compare rates\n  \n  - [Mortgage rates](https:\/\/www.bankrate.com\/mortgages\/mortgage-rates\/)\n  - [30-year mortgage rates](https:\/\/www.bankrate.com\/mortgages\/30-year-mortgage-rates\/?disablePre=1)\n  - [15-year mortgage rates](https:\/\/www.bankrate.com\/mortgages\/15-year-mortgage-rates\/?disablePre=1)\n  - [VA loan rates](https:\/\/www.bankrate.com\/mortgages\/va-loan-rates\/)\n  \n  Get guidance\n  \n  - [Mortgage calculator](https:\/\/www.bankrate.com\/mortgages\/mortgage-calculator\/)\n  - [Amortization calculator](https:\/\/www.bankrate.com\/mortgages\/amortization-calculator\/)\n  - [Mortgage rate news](https:\/\/www.bankrate.com\/mortgages\/analysis\/)\n  - [Daily mortgage rates archive](https:\/\/www.bankrate.com\/mortgages\/todays-rates\/)\n  - [Read lender reviews](https:\/\/www.bankrate.com\/mortgages\/reviews\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/4037e1299d\/how-to-get-a-mortgage.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) How to get a mortgage 11 min read](https:\/\/www.bankrate.com\/mortgages\/how-to-get-a-mortgage\/)\n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/8889d553d1\/best-mortgage-lenders-nav-imagery.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) First-time homebuyer programs 11 min read](https:\/\/www.bankrate.com\/mortgages\/first-time-homebuyer-loans-and-programs\/)\n  \n  Compare rates\n  \n  - [Refinance rates](https:\/\/www.bankrate.com\/mortgages\/refinance-rates\/)\n  - [Cash-out refinance rates](https:\/\/www.bankrate.com\/mortgages\/cash-out-refinance-rates\/)\n  - [30-year refinance rates](https:\/\/www.bankrate.com\/mortgages\/30-year-refinance-rates\/?disablePre=1)\n  - [15-year refinance rates](https:\/\/www.bankrate.com\/mortgages\/15-year-refinance-rates\/?disablePre=1)\n  \n  Get guidance\n  \n  - [Mortgage refinance calculator](https:\/\/www.bankrate.com\/mortgages\/refinance-calculator\/)\n  - [Best refinance lenders](https:\/\/www.bankrate.com\/mortgages\/best-lenders\/refinance-mortgage-lenders\/)\n  - [Best cash-out refinance lenders](https:\/\/www.bankrate.com\/mortgages\/best-lenders\/cash-out-refinance-lenders\/)\n  - [Mortgage refinance resources](https:\/\/www.bankrate.com\/mortgages\/refinancing\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1442x1440\/d475e14a0e\/home-equity-lender-reviews-nav-imagery.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) How to refinance your mortgage 12 min read](https:\/\/www.bankrate.com\/mortgages\/how-does-refinancing-a-mortgage-work\/)\n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/e9e92b7729\/home-equity-heloc-guide-nav-imagery.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Cash-out refinancing guide 9 min read](https:\/\/www.bankrate.com\/mortgages\/cash-out-refinancing\/)\n  \n  Buying & selling\n  \n  Knowing what to look for in a real estate agent is critical. Here's how to choose the best fit for your needs.\n  \n  [Choosing an agent](https:\/\/www.bankrate.com\/mortgages\/finding-best-real-estate-agent\/)\n  \n  Get guidance\n  \n  - [Home affordability calculator](https:\/\/www.bankrate.com\/mortgages\/home-affordability-calculator\/)\n  - [Cost of living calculator](https:\/\/www.bankrate.com\/personal-finance\/cost-of-living-calculator\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/08fb8be334\/buying-a-home.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Buying a home 12 min read](https:\/\/www.bankrate.com\/mortgages\/how-to-buy-a-house\/)\n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/3b255b330e\/selling-a-home-nav-imagery.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Selling a home 10 min read](https:\/\/www.bankrate.com\/mortgages\/how-to-sell-your-house\/)\n  \n  [Explore all mortgages resources](https:\/\/www.bankrate.com\/mortgages\/)\n- [Investing](https:\/\/www.bankrate.com\/investing\/)\n  All\n  \n  Investing\n  \n  Investing\n  \n  Retirement\n  \n  Financial advising\n  \n  [Explore all investing resources](https:\/\/www.bankrate.com\/investing\/)\n  \n  Investing\n  \n  Compare investments\n  \n  - [Best investments](https:\/\/www.bankrate.com\/investing\/best-investments\/)\n  - [Best index funds](https:\/\/www.bankrate.com\/investing\/best-index-funds\/)\n  - [Best long-term investments](https:\/\/www.bankrate.com\/investing\/best-long-term-investments\/)\n  - [Best short-term investments](https:\/\/www.bankrate.com\/investing\/best-short-term-investments\/)\n  \n  Get guidance\n  \n  - [All investing calculators](https:\/\/www.bankrate.com\/investing\/calculators\/)\n  - [Brokerage reviews](https:\/\/www.bankrate.com\/investing\/brokerage-reviews\/)\n  - [Robo-advisor reviews](https:\/\/www.bankrate.com\/investing\/roboadvisor-reviews\/)\n  - [Low risk investments](https:\/\/www.bankrate.com\/investing\/low-risk-investments\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/3cfd293f15\/passive-income-ideas-nav-imagery.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Passive income ideas 26 min read](https:\/\/www.bankrate.com\/investing\/passive-income-ideas\/)\n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/3d6f458d84\/how-to-start-investing-nav-imagery.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) How to start investing 7 min read](https:\/\/www.bankrate.com\/investing\/how-to-start-investing\/)\n  \n  Compare plans\n  \n  - [Best retirement plans](https:\/\/www.bankrate.com\/retirement\/best-retirement-plans\/)\n  - [Best IRA accounts](https:\/\/www.bankrate.com\/retirement\/best-ira-accounts\/)\n  - [Best Roth IRA accounts](https:\/\/www.bankrate.com\/investing\/best-roth-ira\/)\n  - [Best 401(k) rollover options](https:\/\/www.bankrate.com\/retirement\/best-places-to-rollover-401k\/)\n  \n  Get guidance\n  \n  - [401(k) calculator](https:\/\/www.bankrate.com\/retirement\/401-k-calculator\/)\n  - [Retirement plan calculator](https:\/\/www.bankrate.com\/retirement\/retirement-plan-calculator\/)\n  - [Roth IRA calculator](https:\/\/www.bankrate.com\/retirement\/roth-ira-plan-calculator\/)\n  - [All retirement calculators](https:\/\/www.bankrate.com\/retirement\/calculators\/)\n  - [Retirement resources](https:\/\/www.bankrate.com\/retirement\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/59a3f533a8\/best-worst-states-for-retirement-nav-imagery.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Best & worst states for retirement 6 min read](https:\/\/www.bankrate.com\/retirement\/best-and-worst-states-for-retirement\/)\n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/a6b1dc15ca\/how-to-save-for-retirement-nav-imagery.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) How to save for retirement 15 min read](https:\/\/www.bankrate.com\/retirement\/how-to-save-for-retirement\/)\n  \n  Finding an advisor\n  \n  - [Find a financial advisor](https:\/\/www.bankrate.com\/investing\/financial-advisors\/financial-advisor-matching\/)\n  - [Best financial advisors](https:\/\/www.bankrate.com\/investing\/financial-advisors\/best-financial-advisors\/)\n  - [How to choose a financial advisor](https:\/\/www.bankrate.com\/investing\/financial-advisors\/how-to-choose-a-financial-advisor\/)\n  - [Financial planner vs advisor](https:\/\/www.bankrate.com\/investing\/financial-advisors\/financial-advisor-vs-financial-planner\/)\n  \n  Get guidance\n  \n  - [What is financial planning?](https:\/\/www.bankrate.com\/investing\/financial-advisors\/what-is-financial-planning\/)\n  - [What is a fiduciary?](https:\/\/www.bankrate.com\/investing\/financial-advisors\/what-is-a-fiduciary\/)\n  - [What is a CFP?](https:\/\/www.bankrate.com\/investing\/financial-advisors\/what-is-a-certified-financial-planner\/)\n  - [What is wealth management?](https:\/\/www.bankrate.com\/investing\/financial-advisors\/what-is-wealth-management\/)\n  - [Financial advisor resources](https:\/\/www.bankrate.com\/investing\/financial-advisors\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/1cdbf65950\/what-is-wealth-management-s.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) When to get an advisor 4 min read](https:\/\/www.bankrate.com\/investing\/financial-advisors\/when-to-get-a-financial-advisor\/)\n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/38750a2d5a\/what-is-a-certified-financial-planner-s.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Pros & cons of financial advising 7 min read](https:\/\/www.bankrate.com\/investing\/financial-advisors\/pros-cons-financial-advisor\/)\n  \n  [Explore all investing resources](https:\/\/www.bankrate.com\/investing\/)\n- [Credit cards](https:\/\/www.bankrate.com\/credit-cards\/)\n  All\n  \n  Credit cards\n  \n  Cards by category\n  \n  Cards by credit\n  \n  Tools & reviews\n  \n  Guides & resources\n  \n  [Explore all credit cards resources](https:\/\/www.bankrate.com\/credit-cards\/)\n  \n  Credit cards\n  \n  Compare cards\n  \n  - [Best cards of 2026](https:\/\/www.bankrate.com\/credit-cards\/best-credit-cards\/)\n  - [Best cash back cards](https:\/\/www.bankrate.com\/credit-cards\/cash-back\/best-cash-back-cards\/)\n  - [Best balance transfer cards](https:\/\/www.bankrate.com\/credit-cards\/balance-transfer\/best-balance-transfer-cards\/)\n  - [Best 0% APR cards](https:\/\/www.bankrate.com\/credit-cards\/zero-interest\/best-zero-interest-cards\/)\n  - [Best travel cards](https:\/\/www.bankrate.com\/credit-cards\/travel\/best-travel-cards\/)\n  - [Best rewards cards](https:\/\/www.bankrate.com\/credit-cards\/rewards\/best-rewards-cards\/)\n  - [Best business cards](https:\/\/www.bankrate.com\/credit-cards\/business\/best-business-cards\/)\n  - [Best sign up bonus cards](https:\/\/www.bankrate.com\/credit-cards\/rewards\/best-bonus-offer-cards\/)\n  \n  Find my matches\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/4f02ac6944\/cardmatch-nav-imagery.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) CardMatch™ Get personalized card recommendations](https:\/\/www.bankrate.com\/credit-cards\/tools\/cardmatch\/)\n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/10ad7295ae\/card-comparison-tool-nav-imagery.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Card comparison tool Compare credit cards side-by-side](https:\/\/www.bankrate.com\/credit-cards\/tools\/compare\/)\n  \n  See your card matches\n  \n  Answer a few quick questions and we’ll show you your top credit card options.\n  \n  [Find my matches](https:\/\/www.bankrate.com\/credit-cards\/tools\/cardmatch\/)\n  \n  Compare cards\n  \n  - [Excellent credit](https:\/\/www.bankrate.com\/credit-cards\/rewards\/best-for-excellent-credit\/)\n  - [Good credit](https:\/\/www.bankrate.com\/credit-cards\/building-credit\/best-for-good-credit\/)\n  - [Fair credit](https:\/\/www.bankrate.com\/credit-cards\/building-credit\/best-for-fair-credit\/)\n  - [Bad credit](https:\/\/www.bankrate.com\/credit-cards\/bad-credit\/best-for-bad-credit\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/2e8651b174\/how-to-build-credit-nav-imagery.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) How to build credit 7 min read](https:\/\/www.bankrate.com\/personal-finance\/credit\/how-to-build-credit-fast\/)\n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/5a53191033\/best-cards-for-building-credit-nav-imagery.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Best cards for building credit Find out which credit cards could help](https:\/\/www.bankrate.com\/credit-cards\/building-credit\/best-for-no-credit-history\/)\n  \n  See what the experts say\n  \n  Read in-depth credit card reviews to find out which cards have the best perks and more.\n  \n  [Read card reviews](https:\/\/www.bankrate.com\/credit-cards\/reviews\/)\n  \n  Get guidance\n  \n  - [Credit card payoff calculator](https:\/\/www.bankrate.com\/credit-cards\/tools\/credit-card-payoff-calculator\/)\n  - [Balance transfer calculator](https:\/\/www.bankrate.com\/credit-cards\/tools\/credit-card-balance-transfer-calculator\/)\n  - [Credit utilization calculator](https:\/\/www.bankrate.com\/credit-cards\/tools\/credit-utilization-calculator\/)\n  - [Points and miles calculator](https:\/\/www.bankrate.com\/credit-cards\/tools\/points-and-miles-calculator\/)\n  - [All credit card calculators](https:\/\/www.bankrate.com\/credit-cards\/tools\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/43548bf9cd\/spender-type-tool-nav-imagery.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Spender type tool Find cards that fit your needs](https:\/\/www.bankrate.com\/credit-cards\/tools\/spender-type-tool\/)\n  \n  Get advice\n  \n  - [Credit cards 101](https:\/\/www.bankrate.com\/credit-cards\/advice\/)\n  - [Balance transfer advice](https:\/\/www.bankrate.com\/credit-cards\/balance-transfer\/)\n  - [Zero interest credit cards](https:\/\/www.bankrate.com\/credit-cards\/zero-interest\/)\n  - [Rewards credit card advice](https:\/\/www.bankrate.com\/credit-cards\/rewards\/)\n  - [Cash back credit card advice](https:\/\/www.bankrate.com\/credit-cards\/cash-back\/)\n  - [Travel credit card advice](https:\/\/www.bankrate.com\/credit-cards\/travel\/)\n  - [Business credit card advice](https:\/\/www.bankrate.com\/credit-cards\/business\/)\n  \n  Build credit\n  \n  - [Advice for bad credit](https:\/\/www.bankrate.com\/credit-cards\/bad-credit\/)\n  - [Rebuilding credit score](https:\/\/www.bankrate.com\/credit-cards\/building-credit\/)\n  \n  [Explore all credit cards resources](https:\/\/www.bankrate.com\/credit-cards\/)\n- [Loans](https:\/\/www.bankrate.com\/loans\/)\n  All\n  \n  Loans\n  \n  Personal loans\n  \n  Auto loans\n  \n  Student loans\n  \n  Small business loans\n  \n  [Explore all loans resources](https:\/\/www.bankrate.com\/loans\/)\n  \n  Loans\n  \n  Compare lenders\n  \n  - [Best personal loans](https:\/\/www.bankrate.com\/loans\/personal-loans\/rates\/)\n  - [Best personal loans for bad credit](https:\/\/www.bankrate.com\/loans\/personal-loans\/bad-credit-loans\/)\n  - [Best debt consolidation loans](https:\/\/www.bankrate.com\/loans\/personal-loans\/debt-consolidation-loans\/)\n  - [Best home improvement loans](https:\/\/www.bankrate.com\/loans\/home-improvement\/rates\/)\n  \n  Get guidance\n  \n  - [Personal loan resources](https:\/\/www.bankrate.com\/loans\/personal-loans\/)\n  - [Personal loan lender reviews](https:\/\/www.bankrate.com\/loans\/personal-loans\/reviews\/)\n  - [Personal loans calculator](https:\/\/www.bankrate.com\/loans\/personal-loans\/personal-loan-calculator\/)\n  - [Average personal loan interest rates](https:\/\/www.bankrate.com\/loans\/personal-loans\/average-personal-loan-rates\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/38750a2d5a\/what-is-a-certified-financial-planner-s.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Personal loan basics 9 min read](https:\/\/www.bankrate.com\/loans\/personal-loans\/what-is-a-personal-loan\/)\n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/4c26764452\/how-to-start-saving.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) How to get a personal loan 11 min read](https:\/\/www.bankrate.com\/loans\/personal-loans\/how-to-get-personal-loan\/)\n  \n  Compare lenders\n  \n  - [Best auto loans](https:\/\/www.bankrate.com\/loans\/auto-loans\/rates\/)\n  - [Best auto loan refinance rates](https:\/\/www.bankrate.com\/loans\/auto-loans\/refinance-rates\/)\n  - [Best car loans for bad credit](https:\/\/www.bankrate.com\/loans\/auto-loans\/bad-credit-loans\/)\n  \n  Get guidance\n  \n  - [Auto loan resources](https:\/\/www.bankrate.com\/loans\/auto-loans\/)\n  - [Auto loan lender reviews](https:\/\/www.bankrate.com\/loans\/auto-loans\/reviews\/)\n  - [Auto loan calculator](https:\/\/www.bankrate.com\/loans\/auto-loans\/auto-loan-calculator\/)\n  - [Auto loan refinancing guide](https:\/\/www.bankrate.com\/loans\/auto-loans\/how-to-refinance-car-loan\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/d1a328a134\/auto-loan-refinancing-guide-nav.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) How to get the best auto loan rate 10 min read](https:\/\/www.bankrate.com\/loans\/auto-loans\/how-to-get-the-best-auto-loan-rate\/)\n  - [![](https:\/\/www.bankrate.com\/f\/102997\/720x720\/c481afa0d2\/auto-loan-refinancing-guide-s.jpg\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Auto loan basics 5 min read](https:\/\/www.bankrate.com\/loans\/auto-loans\/what-is-an-auto-loan\/)\n  \n  Compare lenders\n  \n  - [Student loan rates](https:\/\/www.bankrate.com\/loans\/student-loans\/rates\/)\n  - [Student loan refinancing rates](https:\/\/www.bankrate.com\/loans\/student-loans\/refinance-rates\/)\n  - [Best bad credit student loans](https:\/\/www.bankrate.com\/loans\/student-loans\/bad-credit-loans\/)\n  \n  Get guidance\n  \n  - [Student loan resources](https:\/\/www.bankrate.com\/loans\/student-loans\/)\n  - [Student loan lender reviews](https:\/\/www.bankrate.com\/loans\/student-loans\/reviews\/)\n  - [Student loan calculator](https:\/\/www.bankrate.com\/loans\/student-loans\/student-loan-calculator\/)\n  - [Student loan refinance calculator](https:\/\/www.bankrate.com\/loans\/student-loans\/student-loan-refinance-calculator\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/3d6f458d84\/how-to-start-investing-nav-imagery.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Private student loan basics 10 min read](https:\/\/www.bankrate.com\/loans\/student-loans\/private-student-loans-guide\/)\n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/4c26764452\/how-to-start-saving.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) How to get a student loan 11 min read](https:\/\/www.bankrate.com\/loans\/student-loans\/how-to-get-student-loan\/)\n  \n  Compare lenders\n  \n  - [Best small business loans](https:\/\/www.bankrate.com\/loans\/small-business\/best-small-business-loans\/)\n  - [Bad credit small business loans](https:\/\/www.bankrate.com\/loans\/small-business\/bad-credit-business-loans\/)\n  - [Business lines of credit](https:\/\/www.bankrate.com\/loans\/small-business\/business-line-of-credit\/)\n  - [Small business loan banks](https:\/\/www.bankrate.com\/loans\/small-business\/best-banks-for-small-business-loans\/)\n  \n  Get guidance\n  \n  - [Small business loans resources](https:\/\/www.bankrate.com\/loans\/small-business\/)\n  - [Small business loan reviews](https:\/\/www.bankrate.com\/loans\/small-business\/reviews\/)\n  - [Small business loan calculator](https:\/\/www.bankrate.com\/loans\/small-business\/business-loan-calculator\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/4c26764452\/how-to-start-saving.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) How small business loans work 9 min read](https:\/\/www.bankrate.com\/loans\/small-business\/how-do-small-business-loans-work\/)\n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/38750a2d5a\/what-is-a-certified-financial-planner-s.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) How to get a business loan 9 min read](https:\/\/www.bankrate.com\/loans\/small-business\/how-to-get-a-business-loan\/)\n  \n  [Explore all loans resources](https:\/\/www.bankrate.com\/loans\/)\n- [Home equity](https:\/\/www.bankrate.com\/home-equity\/)\n  All\n  \n  Home equity\n  \n  HELOC\n  \n  Home equity loans\n  \n  [Explore all home equity resources](https:\/\/www.bankrate.com\/home-equity\/)\n  \n  Home equity\n  \n  HELOC\n  \n  A HELOC is a variable-rate line of credit that lets you borrow funds for a set period and repay them later.\n  \n  [HELOC Rates](https:\/\/www.bankrate.com\/home-equity\/heloc-rates\/)\n  \n  Home equity basics\n  \n  - [Best HELOC lenders](https:\/\/www.bankrate.com\/home-equity\/heloc-lenders\/)\n  - [HELOC calculator](https:\/\/www.bankrate.com\/home-equity\/heloc-calculator\/)\n  - [What is a HELOC?](https:\/\/www.bankrate.com\/home-equity\/what-is-heloc\/)\n  - [Pros and cons of HELOCs](https:\/\/www.bankrate.com\/home-equity\/pros-cons-of-home-equity-lines\/)\n  - [Home equity lender reviews](https:\/\/www.bankrate.com\/home-equity\/reviews\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/e9e92b7729\/home-equity-heloc-guide-nav-imagery.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) What is home equity? 8 min read](https:\/\/www.bankrate.com\/home-equity\/what-is-home-equity\/)\n  - [![Home purchase](https:\/\/www.bankrate.com\/f\/102997\/1280x720\/98576f9f53\/home-purchase.jpeg\/m\/50x50\/filters:quality\$90\$:format\$webp\$) How to calculate home equity 6 min read](https:\/\/www.bankrate.com\/home-equity\/how-to-calculate-equity-in-your-home\/)\n  \n  Home equity loans\n  \n  Home equity loans let you borrow a lump sum at a fixed rate, based on how much of the home you own outright.\n  \n  [Home equity loan rates](https:\/\/www.bankrate.com\/home-equity\/home-equity-loan-rates\/)\n  \n  Get guidance\n  \n  - [What is a home equity loan?](https:\/\/www.bankrate.com\/home-equity\/what-is-home-equity-loan\/)\n  - [Home equity loan pros and cons](https:\/\/www.bankrate.com\/home-equity\/pros-cons-home-equity-loan\/)\n  - [Home equity loan requirements](https:\/\/www.bankrate.com\/home-equity\/requirements-to-borrow-from-home-equity\/)\n  - [HELOC vs home equity loan](https:\/\/www.bankrate.com\/home-equity\/home-equity-loan-vs-line-of-credit\/)\n  - [How to build home equity](https:\/\/www.bankrate.com\/home-equity\/how-to-build-equity-in-your-home\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/721x720\/bad3fd8f56\/heloc-lender-reviews-s.jpg\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Best home equity loan lenders Compare top home equity lenders](https:\/\/www.bankrate.com\/home-equity\/home-equity-loan-lenders\/)\n  - [![CD Rates](https:\/\/www.bankrate.com\/f\/102997\/1920x1080\/2654611691\/cd-rates.jpeg\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Home equity calculator Calculate how much you can borrow](https:\/\/www.bankrate.com\/home-equity\/home-equity-calculator\/)\n  \n  [Explore all home equity resources](https:\/\/www.bankrate.com\/home-equity\/)\n- [Insurance](https:\/\/www.bankrate.com\/insurance\/)\n  All\n  \n  Insurance\n  \n  Auto insurance\n  \n  Home insurance\n  \n  Tools & reviews\n  \n  [Explore all insurance resources](https:\/\/www.bankrate.com\/insurance\/)\n  \n  Insurance\n  \n  Compare rates\n  \n  - [Car insurance quotes](https:\/\/www.bankrate.com\/insurance\/car\/car-insurance-quotes\/)\n  - [Best car insurance companies](https:\/\/www.bankrate.com\/insurance\/car\/best-car-insurance-companies\/)\n  - [Cheapest car insurance companies](https:\/\/www.bankrate.com\/insurance\/car\/cheap-car-insurance-companies\/)\n  - [Compare car insurance rates](https:\/\/www.bankrate.com\/insurance\/car\/average-cost-of-car-insurance\/)\n  \n  Popular states\n  \n  - [California](https:\/\/www.bankrate.com\/insurance\/car\/california\/)\n  - [Florida](https:\/\/www.bankrate.com\/insurance\/car\/florida\/)\n  - [Texas](https:\/\/www.bankrate.com\/insurance\/car\/texas\/)\n  - [Ohio](https:\/\/www.bankrate.com\/insurance\/car\/ohio\/)\n  - [Auto insurance by state](https:\/\/www.bankrate.com\/insurance\/car\/states\/)\n  \n  - [![Person smiling while sitting in car](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/5bfb00cc0b\/auto-insurance-by-state.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) How much is car insurance? Average cost of car insurance](https:\/\/www.bankrate.com\/insurance\/car\/average-cost-of-car-insurance\/)\n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/20e5cbc3e7\/how-much-is-car-insurance-nav.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Car insurance resources Learn more about car insurance](https:\/\/www.bankrate.com\/insurance\/car\/)\n  \n  Compare rates\n  \n  - [Home insurance quotes](https:\/\/www.bankrate.com\/insurance\/homeowners-insurance\/home-insurance-quotes\/)\n  - [Best home insurance companies](https:\/\/www.bankrate.com\/insurance\/homeowners-insurance\/best-home-insurance-companies\/)\n  - [Cheapest home insurance companies](https:\/\/www.bankrate.com\/insurance\/homeowners-insurance\/cheap-homeowners-insurance\/)\n  - [Best home and auto bundles](https:\/\/www.bankrate.com\/insurance\/car-and-home-insurance-bundle\/)\n  \n  Popular states\n  \n  - [California](https:\/\/www.bankrate.com\/insurance\/homeowners-insurance\/california\/)\n  - [Florida](https:\/\/www.bankrate.com\/insurance\/homeowners-insurance\/florida\/)\n  - [Texas](https:\/\/www.bankrate.com\/insurance\/homeowners-insurance\/texas\/)\n  - [New Jersey](https:\/\/www.bankrate.com\/insurance\/homeowners-insurance\/new-jersey\/)\n  - [Home insurance by state](https:\/\/www.bankrate.com\/insurance\/homeowners-insurance\/states\/)\n  \n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/8af9dfc8a2\/home-insurance-by-state-nav-imagery.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Home insurance cost Average cost of home insurance](https:\/\/www.bankrate.com\/insurance\/homeowners-insurance\/homeowners-insurance-cost\/)\n  - [![](https:\/\/www.bankrate.com\/f\/102997\/1440x1440\/e85a91b40b\/how-much-is-home-insurance-nav-imagery.png\/m\/50x50\/filters:quality\$90\$:format\$webp\$) Home insurance resources Learn more about home insurance](https:\/\/www.bankrate.com\/insurance\/homeowners-insurance\/)\n  \n  Calculators\n  \n  - [Car insurance calculator](https:\/\/www.bankrate.com\/insurance\/car\/car-insurance-calculator\/)\n  - [Home insurance calculator](https:\/\/www.bankrate.com\/insurance\/homeowners-insurance\/home-insurance-calculator\/)\n  \n  Get guidance\n  \n  - [Allstate insurance review](https:\/\/www.bankrate.com\/insurance\/reviews\/allstate\/)\n  - [Progressive insurance review](https:\/\/www.bankrate.com\/insurance\/reviews\/progressive\/)\n  - [State Farm insurance review](https:\/\/www.bankrate.com\/insurance\/reviews\/state-farm\/)\n  - [Travelers insurance review](https:\/\/www.bankrate.com\/insurance\/reviews\/travelers\/)\n  - [Lemonade insurance review](https:\/\/www.bankrate.com\/insurance\/reviews\/lemonade\/)\n  \n  - [![Design element two people looking at a car](https:\/\/www.bankrate.com\/f\/102997\/475x270\/8e81cf93f6\/insurance_best_car_insurance_companies.webp\/m\/50x50\/filters:quality\$90\$:format\$webp\$) All insurance company reviews Browse insurance carrier reviews](https:\/\/www.bankrate.com\/insurance\/reviews\/)\n  \n  [Explore all insurance resources](https:\/\/www.bankrate.com\/insurance\/)\n\n{ closeNav(); closeSearch(); }\" :class=\"{ 'is-active': isNavOpen \\|\\| (\\$el.dataset.showOnSearch === '1' && isSearchOpen) }\"\\>\n\n{ closeNav(); closeSearch(); }\" :class=\"{ 'is-active': isNavOpen \\|\\| (\\$el.dataset.showOnSearch === '1' && isSearchOpen) }\"\\>\n\n0; } } catch (error) { this.searchSuggestions = \\[\\]; this.showSearchAutocomplete = false; } } }\" data-beam-element-viewed data-type=\"drawer\" data-location=\"site-nav\" data-name=\"search flyout\" data-position=\"top\" data-text=\"open search flyout\" data-outcome=\"open search flyout container\"\\>\n\n**Popular searches**\n\n- [Mortgage rates](https:\/\/www.bankrate.com\/mortgages\/mortgage-rates\/)\n- [Balance transfer credit cards](https:\/\/www.bankrate.com\/credit-cards\/balance-transfer\/best-balance-transfer-cards\/)\n- [Car insurance quotes](https:\/\/www.bankrate.com\/insurance\/car\/car-insurance-quotes\/)\n\n**Tools**\n\n- [Mortgage calculator](https:\/\/www.bankrate.com\/mortgages\/mortgage-calculator\/)\n- [Loan calculator](https:\/\/www.bankrate.com\/loans\/loan-calculator\/)\n- [CD calculator](https:\/\/www.bankrate.com\/banking\/cds\/cd-calculator\/)\n\n1. [Retirement](https:\/\/www.bankrate.com\/retirement\/)  ›\n2. A complete guide to 401(k) retirement plans: What is a 401(k)?\n\nAdvertiser Disclosure\n\n# A complete guide to 401(k) retirement plans: What is a 401(k)?\n![James Royal, Ph.D.](https:\/\/www.bankrate.com\/2021\/10\/26151853\/James-Royal-headshot-scaled-square.jpg?auto=webp&quality=85&width=24&height=24&fit=cover&enable=upscale&crop=1:1,smart) ![Erin Kennedy](https:\/\/www.bankrate.com\/brp\/2024\/08\/22150559\/Erin-Kennedy-3668-2-scaled.jpg?auto=webp&quality=85&width=24&height=24&fit=cover&enable=upscale&crop=1:1,smart)\n\nWritten by\n\nJames Royal, Ph.D.\n\n,\n\n![](https:\/\/www.bankrate.com\/2021\/10\/26151853\/James-Royal-headshot-scaled-square.jpg?auto=webp&quality=85&width=64&height=64&fit=cover&enable=upscale&crop=1:1,smart)\n\n[James Royal, Ph.D.](https:\/\/www.bankrate.com\/authors\/james-royal\/)\n\nFormer Principal Writer, Investing and Wealth Management\n\nExpertise\n\n- •  Investing\n- •  Wealth management\n\nFormer Bankrate principal writer and editor James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more.\n\n[Read more](https:\/\/www.bankrate.com\/authors\/james-royal\/)\n\n- [Connect with James Royal, Ph.D. on Twitter](https:\/\/twitter.com\/JimRoyalPhD)\n- [Connect with James Royal, Ph.D. on LinkedIn](https:\/\/www.linkedin.com\/in\/james-royal-phd-809b929\/)\n- [Get in contact with James Royal, Ph.D. via Email](mailto:jroyal@redventures.com)\n\nClose\n\n[James Royal, Ph.D.](https:\/\/www.bankrate.com\/authors\/james-royal\/),\n\nEdited by\n\nErin Kennedy\n\n![](https:\/\/www.bankrate.com\/brp\/2024\/08\/22150559\/Erin-Kennedy-3668-2-scaled.jpg?auto=webp&quality=85&width=64&height=64&fit=cover&enable=upscale&crop=1:1,smart)\n\n[Erin Kennedy](https:\/\/www.bankrate.com\/authors\/erin-kennedy\/)\n\nFormer Senior Editor, Investing\n\nExpertise\n\n- •  Stocks\n- •  Investing\n\nFormer Bankrate senior investing editor Erin Kennedy has spent over a dozen years editing and publishing in the financial media space. Her longtime goal has been to help educate people on topics in finance that can seem [uninteresting](https:\/\/www.bankrate.com\/investing\/time-value-of-money\/) or too complex, and she embraces a reader-centered mindset.\n\n[Read more](https:\/\/www.bankrate.com\/authors\/erin-kennedy\/)\n\n- [Connect with Erin Kennedy on LinkedIn](https:\/\/www.linkedin.com\/in\/erin-kennedy-4b36aa75\/)\n\nClose\n\n[Erin Kennedy](https:\/\/www.bankrate.com\/authors\/erin-kennedy\/)\n\nPublished on June 02, 2025 \\| 7 min read\n\nBankrate is always editorially independent. While we adhere to strict editorial integrity , this post may contain references to products from our partners. Here's an explanation for how we make money . Our Bankrate promise is to ensure everything we publish is objective, accurate and trustworthy.\n\n![Office employees meet in a large room](https:\/\/www.bankrate.com\/2021\/08\/15143351\/What-is-a-401k.jpeg?auto=webp&optimize=high&crop=16:9)\n\nMorsa Images\/Getty Images\n\nTable of contents\n\n- [What is a 401(k) plan and how does it work?](https:\/\/www.bankrate.com\/retirement\/401k\/#what-is)\n- [Getting started with a 401(k)](https:\/\/www.bankrate.com\/retirement\/401k\/#getting-started)\n- [How much should you contribute to your 401(k)?](https:\/\/www.bankrate.com\/retirement\/401k\/#contributions)\n- [Investing options for 401(k)s](https:\/\/www.bankrate.com\/retirement\/401k\/#investments)\n- [How to choose investments for your 401(k)](https:\/\/www.bankrate.com\/retirement\/401k\/#how-to-choose)\n- [Why should you invest in a 401(k)?](https:\/\/www.bankrate.com\/retirement\/401k\/#why-invest)\n- [401(k) loans: What they are and how they work](https:\/\/www.bankrate.com\/retirement\/401k\/#loans)\n- [401(k) FAQs](https:\/\/www.bankrate.com\/retirement\/401k\/#faqs)\n\nTable of contents\n\nBack to top\n\n## Key takeaways\n- A 401(k) plan is a tax-advantaged way to invest for retirement, often with employer contributions.\n- You should at least contribute enough to get your employer’s full match — otherwise you’re leaving money on the table.\n- Investment options vary by plan, so you’ll need to evaluate costs, risk and asset mix.\n- Once you set up your 401(k), you’ll have money contributed automatically from your paychecks and invested in the funds you’ve selected.\n- Rules around loans, early withdrawals and required minimum distributions can result in hefty penalties and fees if you’re not paying attention.\n\nIf you’re working and already saving for retirement or plan to start socking away money soon, investing in a 401(k) plan can help you build a sizable nest egg.\n\nIf you’re thinking about signing up for a 401(k), or simply want to know more about how to take full advantage of this [type of retirement plan](https:\/\/www.bankrate.com\/retirement\/best-retirement-plans\/), here’s everything you need to know.\n\n##\n## What is a 401(k) plan and how does it work?\nA 401(k) plan is a tax-advantaged retirement savings tool offered by employers that allows eligible employees to contribute a portion of their salary up to a set amount each year.\n\nUnlike traditional pension plans, in which the employer promises a specified monthly benefit at retirement, 401(k) plans are funded by contributions deducted directly from the employee’s paycheck. Many companies match contributions up to a certain percentage of your annual salary.\n\n##\n## Getting started with a 401(k)\nWhile 401(k) plans are broadly similar, each employer’s plan can differ in important ways, such as whether you can take a loan against your savings or the types of investments available. Here are some key things to understand about your plan as you get started:\n\n- What are your company’s eligibility requirements and will you automatically be enrolled in the plan?\n- Will the plan automatically increase your contribution each year?\n- Does your company offer a matching contribution and how much is it?\n- What investment options does the plan offer? What do they cost and are those funds expensive relative to other available options?\n- Does the plan offer any third-party advice (such as from the plan’s administrator) or any option to have the account managed for you?\n- Can you invest in individual securities or do you have to stick to the funds provided in the plan?\n- Can you take a loan against your account balance? How much does the loan cost?\n\nThese are a few of the most important questions that you’ll want to answer as you get started with your 401(k). Don’t assume that all plans are alike, because your employer may change important aspects of the plan — even beyond the basics, such as its matching contribution.\n\n##\n## How much should you contribute to your 401(k)?\nWhen it comes to how much of your pay you should contribute, everyone has different financial needs in retirement, but there are some general rules you can follow.\n\nContribute enough to take advantage of any matching dollars offered by your employer, says Catherine Golladay, former managing director at Charles Schwab.\n\nWhether your company match is dollar-for-dollar or something smaller, such as 50 cents on the dollar, don’t pass up the match. “Not doing so is like leaving money on the table,” she says.\n\nAfter saving enough to get the full employer match, Golladay suggests paying off high-interest debt and [building an emergency fund](https:\/\/www.bankrate.com\/banking\/savings\/starting-an-emergency-fund\/). Then, go back and maximize tax-advantaged retirement accounts, either the 401(k) or retirement accounts, such as an [individual retirement account (IRA) or Roth IRA](https:\/\/www.bankrate.com\/investing\/traditional-ira-vs-roth-ira\/).\n\nAbout 70 million Americans invest in 401(k)s and these retirement plans hold \\$8.9 trillion in assets, according to the [Investment Company Institute](https:\/\/www.ici.org\/401k), citing data as of Sept. 30, 2024. Plan participants can roll up substantial savings over the years of their working lives. [Here’s how much the average American has in a 401(k) by age](https:\/\/www.bankrate.com\/retirement\/average-401k-balance-by-age\/).\n\nBankrate’s calculator can help you decide [which tax-advantaged account to stash additional funds in](https:\/\/www.bankrate.com\/retirement\/401-k-or-roth-ira-calculator\/).\n\n### Contribution limits for 401(k) plans\nIn 2025, the IRS lets you contribute up to \\$23,500 to your 401(k). If you’re age 50 or older, you can add a \\$7,500 catch-up contribution. Employer matching doesn’t count toward this limit, so the total can be even higher.\n\nThese limits typically go up every year to keep pace with inflation, so check annually to see if you can stash away more money.\n\n### How employer matching works\nEmployer matching is one of the biggest perks of a 401(k). If it’s offered at your job, your employer agrees to [match a portion of your contributions](https:\/\/www.bankrate.com\/retirement\/401k-match\/). For example, they might match 100 percent of your contributions up to 4 percent of your salary.\n\nSome employers use a partial match — 50 percent of your contributions up to 6 percent of your salary, for example.\n\nBut there’s a catch. You may need to stay with the company for a few years to fully “own” the match. [This is called vesting.](https:\/\/www.bankrate.com\/retirement\/what-it-means-to-be-vested\/) Some employers vest you immediately, while others make you wait a year or longer.\n\nAs Golladay notes, getting that company match is essentially free money. Always contribute at least enough to get the full match, even if you can’t max out your account.\n\n##\n## Investing options for 401(k)s\nMost 401(k) plans have at least three investment choices, though others offer many more options. The average plan offers about 28 investment options, according to the Investment Company Institute.\n\nThe menu could include a mix of investments, such as mutual funds, company stock and index funds, as well as stable value funds (or cash), bond funds and so-called “target date” funds, which adjust your portfolio based on your years until retirement.\n\nFortunately, while you can pick your own funds if you’re the do-it-yourself type, you often don’t have to decide how to invest completely on your own.\n\n“Many of today’s 401(k) plans include professional investment advice, which can be key in helping the participant make investment decisions based on their overall financial picture,” Golladay says.\n\n[Target-date funds](https:\/\/www.bankrate.com\/retirement\/target-date-funds-pros-and-cons\/) (TDFs) have become popular options because they automatically adjust the mix of investments over time to align with investors’ risk tolerance as they approach retirement. For example, they move money from higher-risk stock funds to lower-risk bond funds as you near retirement, so that you have a more stable portfolio when you need the money.\n\nWhile target-date funds meet many investors’ demands, they don’t fit every individual’s needs.\n\n“While a TDF can be effective, a more tailored portfolio based on multiple data points about the investor may be the best option for some,” Golladay says.\n\nHere are [other ways that you can maximize your 401(k)](https:\/\/www.bankrate.com\/retirement\/401k-plan-smart-moves-to-make\/) over time and generate higher returns.\n\n##\n## How to choose investments for your 401(k)\nHere are some smart moves to make with your 401(k), including how to earn a higher return by being aggressive with your investments and when not to:\n\n- Design your investments with your age in mind. [Avoid being too conservative](https:\/\/www.bankrate.com\/retirement\/signs-your-401k-portfolio-is-too-conservative\/) when you’re younger and [too aggressive when you’re old](https:\/\/www.bankrate.com\/retirement\/signs-your-401k-portfolio-is-too-aggressive\/). If you’re in your 20s or 30s, you can afford to be more aggressive with your investments — investing more or all of your money into potentially higher-returning stocks or stock funds — because you have more time to recover from any market slumps along the way. As you age, however, your asset allocation should shift to more conservative investments — bonds or bond funds — to help protect your portfolio from the volatility of stocks.\n- [Index funds](https:\/\/www.bankrate.com\/investing\/what-is-an-index-fund\/), such as those based on the S\\&P 500 index, are a good all-around pick for the stock portion of your portfolio. They’re a [top recommendation from legendary investor Warren Buffett](https:\/\/www.bankrate.com\/investing\/good-investment-advice-to-follow\/).\n- Use any tools offered by your 401(k) provider. Many 401(k) plans offer tools (online calculators, worksheets) for determining risk tolerance and suitable investment options.\n- If you’re not comfortable selecting funds or building an investment portfolio on your own, the best tool may be a competent [financial advisor](https:\/\/www.bankrate.com\/investing\/financial-advisors\/financial-advisor-matching\/?utm_source=BRarticle). Select an advisor who can design a long-term plan for you and help you stick to it — [here’s how to find one](https:\/\/www.bankrate.com\/investing\/financial-advisors\/how-to-choose-a-financial-advisor\/).\n- Time is your most important ally when investing for retirement. It’s less important to find the very best investment than it is to find a good investment and then buy and hold it for years, if not decades.\n\nBefore you can decide how to allocate your contributions, determine your risk tolerance. It’s critical to know how well you can deal with volatility in your portfolio. You want to make sure you can sleep at night if financial markets turn turbulent and asset prices fall. But keep in mind that markets historically have recovered even after [brutal bear markets](https:\/\/www.bankrate.com\/investing\/what-is-a-bear-market\/), or stock market declines of 20 percent or more, which are typical during recessions.\n\nBankrate’s [401(K) calculator](https:\/\/www.bankrate.com\/retirement\/401-k-calculator\/) can help you estimate your savings over time.\n\n##\n## Why should you invest in a 401(k)?\nA 401(k) is an excellent investment option, and everyone should consider opening an account if they’re able to. Not all employers offer a 401(k) retirement plan, but if yours does, it’s a smart move to participate in one for the following reasons:\n\nTax advantages\n\nA 401(k) lets you invest on a pre-tax basis, meaning you can take a tax break on this year’s taxes. You’ll be able to grow your assets tax-deferred until you withdraw them at retirement, when you’ll owe tax at ordinary income rates. A [Roth 401(k)](https:\/\/www.bankrate.com\/retirement\/roth-401k\/) also offers tax benefits, but you’ll contribute money on an after-tax basis and enjoy tax-free withdrawals in retirement.\n\nMatching contributions\n\nMany employers offer free matching money if you contribute to your plan. You may be able to rake in an extra 3 or 4 percent of your salary this way, and it’s a risk-free return, though some plans require a few years for the match to vest.\n\nAutomatic investments\n\nOnce you set up your 401(k) investment plan, you’ll have money contributed automatically from your paychecks and invested in the funds you’ve selected.\n\nAttractive investments\n\nMany 401(k) plans offer historically high-return investments such as stocks or stock funds, so you’re likely to earn much more than you could in a traditional bank account over time.\n\nStill, some investors are worried about investing in stocks because of their riskiness.\n\n“All investments come with risk, but the fear of losing money should not inhibit someone from utilizing a 401(k),” Golladay says.\n\nWhile markets go up and go down, history has shown that over the long run, they move up. As measured by the [S\\&P 500 index](https:\/\/www.bankrate.com\/investing\/what-is-sp-500\/), over time stocks returned around 10 percent annually. The S\\&P 500 comprises hundreds of America’s largest publicly traded companies.\n\nThat’s why investors, especially the risk-averse, should take a long-term approach to their retirement investments.\n\n“In times of market volatility or uncertainty, it’s important to remember that panic isn’t a strategy, especially with an investment as long-term in nature as a 401(k),” Golladay says.\n\n##\n## 401(k) loans: What they are and how they work\nIf you need cash for an emergency or to pay down debt, your 401(k) plan may allow you to take out a loan and borrow up to 50 percent of your vested balance, but not more than \\$50,000.\n\nIn most cases, you have to repay the money with interest within five years. While the interest payments go into your account — which means you are paying yourself back rather than giving your money to a bank — there are significant downsides.\n\nWhen you make a 401(k) withdrawal, that money is no longer invested in the market, and therefore, you could miss out on gains if asset prices continue to rise. Also, the original contributions to the account were made with pre-tax dollars, but the loan payments will be made with after-tax dollars. So, you’re losing a key tax benefit here.\n\nIf you leave your employer, you’ll also have to repay your loan faster, generally when taxes are due for the current tax year.\n\nTry to avoid taking a [401(k) loan](https:\/\/www.bankrate.com\/retirement\/borrow-from-401k-loan\/) if at all possible, though it may be better than taking an early withdrawal.\n\n##\n## 401(k) FAQs\n- ### What’s the difference between a traditional 401(k) and a Roth 401(k)?\n  The 401(k) has two varieties: the traditional 401(k) and the Roth 401(k).\n  \n  - **Traditional 401(k):** Employee contributions are made with pre-tax dollars, lowering your taxable income now. Your contributions grow tax-deferred until withdrawn, meaning all of your money is working for you in the market.\n  - **Roth 401(k):** Contributions are made with after-tax dollars, meaning you don’t get a tax benefit today. Your contributions grow tax-free until withdrawn in retirement and [then you’ll be able to avoid tax entirely on the distributions](https:\/\/www.bankrate.com\/retirement\/roth-401k\/).\n- ### What happens to your 401(k) when you switch jobs?\n  Fortunately, a 401(k) offers portability, so you don’t need to be stuck in a former plan if you don’t like it. Workers have a few options for dealing with their [old 401(k) after leaving a company](https:\/\/www.bankrate.com\/retirement\/how-to-find-lost-401k\/):\n  \n  - Roll it over into an IRA.\n  - Keep the assets in the former employer’s plan, if permitted.\n  - [Roll it over into a new employer’s plan](https:\/\/www.bankrate.com\/retirement\/401k-rollover-guide\/), if permitted. You may also have the option of taking a cash distribution, or lump sum, but you’ll probably get hit with penalties and taxes if you’re not at least of retirement age.\n  \n  Whichever path you choose, it’s important to understand the benefits and limitations of each option according to your unique financial situation, Golladay says.\n- ### What is the early withdrawal rule for a 401(k)?\n  Taking money out of your 401(k) before age 59½ is expensive. You’ll owe income tax and a 10 percent IRS penalty unless you qualify for an exception.\n  \n  Exceptions include disability, certain medical bills, a first-time home purchase or separation from your job after age 55. But even with an exception, you’re robbing your future self.\n  \n  Taking an early distribution could be disastrous for your retirement, and more than half of Americans say they are behind in saving for retirement, [according to a Bankrate survey](https:\/\/www.bankrate.com\/retirement\/retirement-savings-survey-october-2022\/).\n  \n  Unless you’re in a serious emergency and have no other options, leave your 401(k) alone until retirement.\n- ### Can you lose money in a 401(k)?\n  The short answer is yes. The longer answer is that whether you make money or lose money in a 401(k) depends on your investments. Some investments, such as [U.S. government bonds](https:\/\/www.bankrate.com\/investing\/how-to-invest-in-bonds\/), may have explicit promises to be repaid, or you may have an investment in cash, which will not decline in value, though it will lose purchasing power over time due to inflation.\n  \n  Other market-based investments, including government bonds, are subject to fluctuations in value, so you may not receive back what you put into the investment. For example, while holders of government bonds will receive their principal back at maturity, the bonds may fluctuate a lot in the interim. So if you have to sell the bond before it matures, you may not receive the price you paid for it. At maturity, you will receive full value, however.\n  \n  Assets such as stocks can fluctuate a lot more in the short term than bonds. That’s why financial advisors [recommend having a longer time horizon](https:\/\/www.bankrate.com\/investing\/best-long-term-investments\/) for stocks. You’ll need to ride out the market’s ups and downs in order to achieve stocks’ potentially more attractive long-term returns.\n  \n  However, regardless of your investment choices, you’ll still pay fees for any funds that you’re invested in. Your long-term performance depends on those fees, so it’s important to minimize them where you can. And don’t think that a higher-priced fund is necessarily better than a low-cost fund. Often higher-priced funds have lower long-term returns than the lower-fee funds.\n- ### What are required minimum distributions (RMDs)?\n  Starting at age 73, you’re required to start taking money out of your traditional 401(k). These are called [required minimum distributions, or RMDs](https:\/\/www.bankrate.com\/retirement\/required-minimum-distribution-rmd\/).\n  \n  The IRS forces you to withdraw a certain amount each year so it can finally collect taxes on your tax-deferred savings. If you skip or shortchange your RMD, the penalty is steep: up to 25 percent of what you should have withdrawn.\n  \n  It’s important to know your RMD schedule, calculate the right amount to withdraw and plan ahead because the IRS won’t remind you.\n\n*— Bankrate’s* [*Rachel Christian*](https:\/\/www.bankrate.com\/authors\/rachel-christian\/) *contributed to an update.*\n\n###\nDid you find this page helpful?\n\n**Why we ask for feedback** Your feedback helps us improve our content and services. It takes less than a minute to complete.\n\nYour responses are anonymous and will only be used for improving our website.\n\nHelp us improve our content\n\nYes\n\nNo\n\nThank you for your feedback\\!\n\nYour input helps us improve our content and services.\n\nCite us\n\nShare this article\n\nShare this article\n\nClose\n\n![](https:\/\/www.bankrate.com\/2021\/10\/26151853\/James-Royal-headshot-scaled-square.jpg?auto=webp&quality=85&width=96&height=96&fit=cover&enable=upscale&crop=1:1,smart)\n\nWritten by\n\n[James Royal, Ph.D.](https:\/\/www.bankrate.com\/authors\/james-royal\/)\n\nFormer Principal Writer, Investing and Wealth Management\n\n- [Connect with James Royal, Ph.D. on Twitter](https:\/\/twitter.com\/JimRoyalPhD)\n- [Connect with James Royal, Ph.D. on LinkedIn](https:\/\/www.linkedin.com\/in\/james-royal-phd-809b929\/)\n- [Get in contact with James Royal, Ph.D. via Email](mailto:jroyal@redventures.com)\n\n[Read more from James](https:\/\/www.bankrate.com\/authors\/james-royal\/)\n\nFormer Bankrate principal writer and editor James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more.\n\n![Office employees meet in a large room](https:\/\/www.bankrate.com\/2021\/08\/15143351\/What-is-a-401k.jpeg?auto=webp&optimize=high&crop=16:9)\n\nMorsa Images\/Getty Images\n\nBankrate is always editorially independent. While we adhere to strict editorial integrity , this post may contain references to products from our partners. Here's an explanation for how we make money . Our Bankrate promise is to ensure everything we publish is objective, accurate and trustworthy.\n\nTable of contents\n\n- [What is a 401(k) plan and how does it work?](https:\/\/www.bankrate.com\/retirement\/401k\/#what-is)\n- [Getting started with a 401(k)](https:\/\/www.bankrate.com\/retirement\/401k\/#getting-started)\n- [How much should you contribute to your 401(k)?](https:\/\/www.bankrate.com\/retirement\/401k\/#contributions)\n- [Investing options for 401(k)s](https:\/\/www.bankrate.com\/retirement\/401k\/#investments)\n- [How to choose investments for your 401(k)](https:\/\/www.bankrate.com\/retirement\/401k\/#how-to-choose)\n- [Why should you invest in a 401(k)?](https:\/\/www.bankrate.com\/retirement\/401k\/#why-invest)\n- [401(k) loans: What they are and how they work](https:\/\/www.bankrate.com\/retirement\/401k\/#loans)\n- [401(k) FAQs](https:\/\/www.bankrate.com\/retirement\/401k\/#faqs)\n\nBack to top\n\n## Up next\nPart of   Intro to 401(k) Plans\n\n![How to set up your 401(k)](https:\/\/www.bankrate.com\/2022\/05\/09093651\/GettyImages-1394289064.jpg)\n\n[How to set up your 401(k)](https:\/\/www.bankrate.com\/retirement\/how-to-set-up-your-401k\/?series=intro-to-401k-plans)\n\nRetirement\n\nBy [Georgina Tzanetos](https:\/\/www.bankrate.com\/authors\/georgina-tzanetos\/)\n\n5 min read\n\n![A group of colleague discuss over a computer](https:\/\/www.bankrate.com\/2020\/06\/16171557\/How-to-pick-investments-in-a-401k.jpeg)\n\n[401(k) investments to maximize your portfolio](https:\/\/www.bankrate.com\/retirement\/how-to-pick-401k-investments\/?series=intro-to-401k-plans)\n\nRetirement\n\nBy [James Royal, Ph.D.](https:\/\/www.bankrate.com\/authors\/james-royal\/)\n\n7 min read\n\n![A woman laughs with colleagues at an office table](https:\/\/www.bankrate.com\/2020\/04\/22191152\/Untitled-11.jpeg)\n\n[Roth 401(k) vs. 401(k): Which one is better for you?](https:\/\/www.bankrate.com\/retirement\/traditional-401k-vs-roth-401k\/?series=intro-to-401k-plans)\n\nRetirement\n\nBy [James Royal, Ph.D.](https:\/\/www.bankrate.com\/authors\/james-royal\/)\n\n8 min read\n\n![A woman works from a laptop at her office](https:\/\/www.bankrate.com\/2021\/07\/28094107\/What-happens-to-your-401k-after-you-leave-a-job.jpeg)\n\n[What happens to your 401(k) after you leave a job? 8 key things to consider](https:\/\/www.bankrate.com\/retirement\/8-tips-on-moving-401k-after-leaving-job\/?series=intro-to-401k-plans)\n\nRetirement\n\nBy [James Royal, Ph.D.](https:\/\/www.bankrate.com\/authors\/james-royal\/)\n\n9 min read\n\n![A woman going over financial documents](https:\/\/www.bankrate.com\/2024\/02\/14160152\/Refresh_Best_401k_rollover_options.jpg)\n\n[Best places to roll over your 401(k) in 2025](https:\/\/www.bankrate.com\/retirement\/best-places-to-rollover-401k\/?series=intro-to-401k-plans)\n\nRetirement\n\nBy [James Royal, Ph.D.](https:\/\/www.bankrate.com\/authors\/james-royal\/)\n\n8 min read\n\n## [Bankrate logo](https:\/\/www.bankrate.com\/)\n### About\n- [About us](https:\/\/www.bankrate.com\/about\/)\n- [Leadership](https:\/\/www.bankrate.com\/leadership\/)\n- [Press room](https:\/\/www.bankrate.com\/press-releases\/)\n- [Bankrate Data Center](https:\/\/www.bankrate.com\/data-center\/)\n- [Careers](https:\/\/www.bankrate.com\/careers\/)\n- [Site map](https:\/\/www.bankrate.com\/corporate\/site-map\/)\n\n### Help\n- [Compare rates](https:\/\/www.bankrate.com\/compare-rates\/)\n- [Latest news](https:\/\/www.bankrate.com\/news\/)\n- [Popular topics](https:\/\/www.bankrate.com\/popular-finance-topics\/)\n- [Advertise with us](https:\/\/www.bankrate.com\/media-kit\/)\n\n### Legal\n- [Privacy policy](https:\/\/www.bankrate.com\/privacy\/)\n- Cookie settings\n- [Do Not Sell or Share My Personal Information](https:\/\/www.bankrate.com\/do-not-sell-or-share-my-personal-information\/)\n- [Consumer Health Information Privacy Policy](https:\/\/www.bankrate.com\/consumer-health-information-privacy-policy\/)\n- [Understanding Bankrate’s averages](https:\/\/www.bankrate.com\/understanding-bankrates-rate-averages\/)\n- [Terms of use](https:\/\/www.bankrate.com\/terms\/)\n- [GLBA annual notice](https:\/\/www.bankrate.com\/glba-notice\/)\n- [California Consumer Financial Privacy Notice](https:\/\/www.bankrate.com\/2022\/02\/15094901\/california-notice.pdf)\n- [Licenses](https:\/\/www.bankrate.com\/licenses\/)\n\n### How we make money\nBankrate.com is an independent, advertising-supported publisher and comparison service. Our websites may earn compensation when a customer clicks on a link, when an application is approved, or when an account is opened. Therefore, this compensation may impact what products appear and how, where, and in what order they appear within listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. Other factors, such as our proprietary website rules and whether a product is offered in your area or at your self-selected credit score range, can also impact how and where products appear on this site. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service.\n\nBankrate, LLC NMLS ID\\# 1427381 \\| [NMLS Consumer Access](http:\/\/www.nmlsconsumeraccess.org\/EntityDetails.aspx\/COMPANY\/1427381)  \n BR Tech Services, Inc. NMLS ID \\#1743443 \\| [NMLS Consumer Access](http:\/\/www.nmlsconsumeraccess.org\/EntityDetails.aspx\/COMPANY\/1743443)\n\n© 2026 Bankrate, LLC. A Red Ventures company. All Rights Reserved.","attrs_readable_markdown":"## Key takeaways\n- A 401(k) plan is a tax-advantaged way to invest for retirement, often with employer contributions.\n- You should at least contribute enough to get your employer’s full match — otherwise you’re leaving money on the table.\n- Investment options vary by plan, so you’ll need to evaluate costs, risk and asset mix.\n- Once you set up your 401(k), you’ll have money contributed automatically from your paychecks and invested in the funds you’ve selected.\n- Rules around loans, early withdrawals and required minimum distributions can result in hefty penalties and fees if you’re not paying attention.\n\nIf you’re working and already saving for retirement or plan to start socking away money soon, investing in a 401(k) plan can help you build a sizable nest egg.\n\nIf you’re thinking about signing up for a 401(k), or simply want to know more about how to take full advantage of this [type of retirement plan](https:\/\/www.bankrate.com\/retirement\/best-retirement-plans\/), here’s everything you need to know.\n\n## What is a 401(k) plan and how does it work?\nA 401(k) plan is a tax-advantaged retirement savings tool offered by employers that allows eligible employees to contribute a portion of their salary up to a set amount each year.\n\nUnlike traditional pension plans, in which the employer promises a specified monthly benefit at retirement, 401(k) plans are funded by contributions deducted directly from the employee’s paycheck. Many companies match contributions up to a certain percentage of your annual salary.\n\n## Getting started with a 401(k)\nWhile 401(k) plans are broadly similar, each employer’s plan can differ in important ways, such as whether you can take a loan against your savings or the types of investments available. Here are some key things to understand about your plan as you get started:\n\n- What are your company’s eligibility requirements and will you automatically be enrolled in the plan?\n- Will the plan automatically increase your contribution each year?\n- Does your company offer a matching contribution and how much is it?\n- What investment options does the plan offer? What do they cost and are those funds expensive relative to other available options?\n- Does the plan offer any third-party advice (such as from the plan’s administrator) or any option to have the account managed for you?\n- Can you invest in individual securities or do you have to stick to the funds provided in the plan?\n- Can you take a loan against your account balance? How much does the loan cost?\n\nThese are a few of the most important questions that you’ll want to answer as you get started with your 401(k). Don’t assume that all plans are alike, because your employer may change important aspects of the plan — even beyond the basics, such as its matching contribution.\n\n## How much should you contribute to your 401(k)?\nWhen it comes to how much of your pay you should contribute, everyone has different financial needs in retirement, but there are some general rules you can follow.\n\nContribute enough to take advantage of any matching dollars offered by your employer, says Catherine Golladay, former managing director at Charles Schwab.\n\nWhether your company match is dollar-for-dollar or something smaller, such as 50 cents on the dollar, don’t pass up the match. “Not doing so is like leaving money on the table,” she says.\n\nAfter saving enough to get the full employer match, Golladay suggests paying off high-interest debt and [building an emergency fund](https:\/\/www.bankrate.com\/banking\/savings\/starting-an-emergency-fund\/). Then, go back and maximize tax-advantaged retirement accounts, either the 401(k) or retirement accounts, such as an [individual retirement account (IRA) or Roth IRA](https:\/\/www.bankrate.com\/investing\/traditional-ira-vs-roth-ira\/).\n\nAbout 70 million Americans invest in 401(k)s and these retirement plans hold \\$8.9 trillion in assets, according to the [Investment Company Institute](https:\/\/www.ici.org\/401k), citing data as of Sept. 30, 2024. Plan participants can roll up substantial savings over the years of their working lives. [Here’s how much the average American has in a 401(k) by age](https:\/\/www.bankrate.com\/retirement\/average-401k-balance-by-age\/).\n\n### Contribution limits for 401(k) plans\nIn 2025, the IRS lets you contribute up to \\$23,500 to your 401(k). If you’re age 50 or older, you can add a \\$7,500 catch-up contribution. Employer matching doesn’t count toward this limit, so the total can be even higher.\n\nThese limits typically go up every year to keep pace with inflation, so check annually to see if you can stash away more money.\n\n### How employer matching works\nEmployer matching is one of the biggest perks of a 401(k). If it’s offered at your job, your employer agrees to [match a portion of your contributions](https:\/\/www.bankrate.com\/retirement\/401k-match\/). For example, they might match 100 percent of your contributions up to 4 percent of your salary.\n\nSome employers use a partial match — 50 percent of your contributions up to 6 percent of your salary, for example.\n\nBut there’s a catch. You may need to stay with the company for a few years to fully “own” the match. [This is called vesting.](https:\/\/www.bankrate.com\/retirement\/what-it-means-to-be-vested\/) Some employers vest you immediately, while others make you wait a year or longer.\n\nAs Golladay notes, getting that company match is essentially free money. Always contribute at least enough to get the full match, even if you can’t max out your account.\n\n## Investing options for 401(k)s\nMost 401(k) plans have at least three investment choices, though others offer many more options. The average plan offers about 28 investment options, according to the Investment Company Institute.\n\nThe menu could include a mix of investments, such as mutual funds, company stock and index funds, as well as stable value funds (or cash), bond funds and so-called “target date” funds, which adjust your portfolio based on your years until retirement.\n\nFortunately, while you can pick your own funds if you’re the do-it-yourself type, you often don’t have to decide how to invest completely on your own.\n\n“Many of today’s 401(k) plans include professional investment advice, which can be key in helping the participant make investment decisions based on their overall financial picture,” Golladay says.\n\n[Target-date funds](https:\/\/www.bankrate.com\/retirement\/target-date-funds-pros-and-cons\/) (TDFs) have become popular options because they automatically adjust the mix of investments over time to align with investors’ risk tolerance as they approach retirement. For example, they move money from higher-risk stock funds to lower-risk bond funds as you near retirement, so that you have a more stable portfolio when you need the money.\n\nWhile target-date funds meet many investors’ demands, they don’t fit every individual’s needs.\n\n“While a TDF can be effective, a more tailored portfolio based on multiple data points about the investor may be the best option for some,” Golladay says.\n\nHere are [other ways that you can maximize your 401(k)](https:\/\/www.bankrate.com\/retirement\/401k-plan-smart-moves-to-make\/) over time and generate higher returns.\n\n## How to choose investments for your 401(k)\nHere are some smart moves to make with your 401(k), including how to earn a higher return by being aggressive with your investments and when not to:\n\n- Design your investments with your age in mind. [Avoid being too conservative](https:\/\/www.bankrate.com\/retirement\/signs-your-401k-portfolio-is-too-conservative\/) when you’re younger and [too aggressive when you’re old](https:\/\/www.bankrate.com\/retirement\/signs-your-401k-portfolio-is-too-aggressive\/). If you’re in your 20s or 30s, you can afford to be more aggressive with your investments — investing more or all of your money into potentially higher-returning stocks or stock funds — because you have more time to recover from any market slumps along the way. As you age, however, your asset allocation should shift to more conservative investments — bonds or bond funds — to help protect your portfolio from the volatility of stocks.\n- [Index funds](https:\/\/www.bankrate.com\/investing\/what-is-an-index-fund\/), such as those based on the S\\&P 500 index, are a good all-around pick for the stock portion of your portfolio. They’re a [top recommendation from legendary investor Warren Buffett](https:\/\/www.bankrate.com\/investing\/good-investment-advice-to-follow\/).\n- Use any tools offered by your 401(k) provider. Many 401(k) plans offer tools (online calculators, worksheets) for determining risk tolerance and suitable investment options.\n- If you’re not comfortable selecting funds or building an investment portfolio on your own, the best tool may be a competent [financial advisor](https:\/\/www.bankrate.com\/investing\/financial-advisors\/financial-advisor-matching\/?utm_source=BRarticle). Select an advisor who can design a long-term plan for you and help you stick to it — [here’s how to find one](https:\/\/www.bankrate.com\/investing\/financial-advisors\/how-to-choose-a-financial-advisor\/).\n- Time is your most important ally when investing for retirement. It’s less important to find the very best investment than it is to find a good investment and then buy and hold it for years, if not decades.\n\nBefore you can decide how to allocate your contributions, determine your risk tolerance. It’s critical to know how well you can deal with volatility in your portfolio. You want to make sure you can sleep at night if financial markets turn turbulent and asset prices fall. But keep in mind that markets historically have recovered even after [brutal bear markets](https:\/\/www.bankrate.com\/investing\/what-is-a-bear-market\/), or stock market declines of 20 percent or more, which are typical during recessions.\n\nBankrate’s [401(K) calculator](https:\/\/www.bankrate.com\/retirement\/401-k-calculator\/) can help you estimate your savings over time.\n\n## Why should you invest in a 401(k)?\nA 401(k) is an excellent investment option, and everyone should consider opening an account if they’re able to. Not all employers offer a 401(k) retirement plan, but if yours does, it’s a smart move to participate in one for the following reasons:\n\nTax advantages\n\nA 401(k) lets you invest on a pre-tax basis, meaning you can take a tax break on this year’s taxes. You’ll be able to grow your assets tax-deferred until you withdraw them at retirement, when you’ll owe tax at ordinary income rates. A [Roth 401(k)](https:\/\/www.bankrate.com\/retirement\/roth-401k\/) also offers tax benefits, but you’ll contribute money on an after-tax basis and enjoy tax-free withdrawals in retirement.\n\nMatching contributions\n\nMany employers offer free matching money if you contribute to your plan. You may be able to rake in an extra 3 or 4 percent of your salary this way, and it’s a risk-free return, though some plans require a few years for the match to vest.\n\nAutomatic investments\n\nOnce you set up your 401(k) investment plan, you’ll have money contributed automatically from your paychecks and invested in the funds you’ve selected.\n\nAttractive investments\n\nMany 401(k) plans offer historically high-return investments such as stocks or stock funds, so you’re likely to earn much more than you could in a traditional bank account over time.\n\nStill, some investors are worried about investing in stocks because of their riskiness.\n\n“All investments come with risk, but the fear of losing money should not inhibit someone from utilizing a 401(k),” Golladay says.\n\nWhile markets go up and go down, history has shown that over the long run, they move up. As measured by the [S\\&P 500 index](https:\/\/www.bankrate.com\/investing\/what-is-sp-500\/), over time stocks returned around 10 percent annually. The S\\&P 500 comprises hundreds of America’s largest publicly traded companies.\n\nThat’s why investors, especially the risk-averse, should take a long-term approach to their retirement investments.\n\n“In times of market volatility or uncertainty, it’s important to remember that panic isn’t a strategy, especially with an investment as long-term in nature as a 401(k),” Golladay says.\n\n## 401(k) loans: What they are and how they work\nIf you need cash for an emergency or to pay down debt, your 401(k) plan may allow you to take out a loan and borrow up to 50 percent of your vested balance, but not more than \\$50,000.\n\nIn most cases, you have to repay the money with interest within five years. While the interest payments go into your account — which means you are paying yourself back rather than giving your money to a bank — there are significant downsides.\n\nWhen you make a 401(k) withdrawal, that money is no longer invested in the market, and therefore, you could miss out on gains if asset prices continue to rise. Also, the original contributions to the account were made with pre-tax dollars, but the loan payments will be made with after-tax dollars. So, you’re losing a key tax benefit here.\n\nIf you leave your employer, you’ll also have to repay your loan faster, generally when taxes are due for the current tax year.\n\nTry to avoid taking a [401(k) loan](https:\/\/www.bankrate.com\/retirement\/borrow-from-401k-loan\/) if at all possible, though it may be better than taking an early withdrawal.\n\n## 401(k) FAQs\n*— Bankrate’s* [*Rachel Christian*](https:\/\/www.bankrate.com\/authors\/rachel-christian\/) *contributed to an update.*\n\nDid you find this page helpful?\n\nHelp us improve our content","meta_canonical":null}

3. Robots.txt Check

Query:

Response:

4. Spam/Ban Check

Query:

Response:

5. Seen Status Check

ℹ️ Skipped - page is already crawled

📄

INDEXABLE

✅

CRAWLED

2 hours ago

🤖

ROBOTS ALLOWED

Page Info Filters

Filter	Status	Condition	Details
HTTP status	PASS	`download_http_code = 200`	HTTP 200
Age cutoff	PASS	`download_stamp > now() - 6 MONTH`	0 months ago
History drop	PASS	`isNull(history_drop_reason)`	No drop reason
Spam/ban	PASS	`fh_dont_index != 1 AND ml_spam_score = 0`	ml_spam_score=0
Canonical	PASS	`meta_canonical IS NULL OR = '' OR = src_unparsed`	Not set

Page Details

Property	Value
URL	https://www.bankrate.com/retirement/401k/
Last Crawled	2026-04-07 04:07:20 (2 hours ago)
First Indexed	2020-04-24 20:20:49 (5 years ago)
HTTP Status Code	200
Meta Title	What Is A 401(k) Retirement Plan? \| Bankrate
Meta Description	If you’re working and saving for retirement, educating yourself on how investing in a 401(k) plan works and how it can help you build a sizable nest egg makes good financial sense., If you’re working and saving for retirement, educating yourself on how investing in a 401(k) plan works and how it can help you build a sizable nest egg makes good financial sense.
Meta Canonical	null
Boilerpipe Text	Key takeaways A 401(k) plan is a tax-advantaged way to invest for retirement, often with employer contributions. You should at least contribute enough to get your employer’s full match — otherwise you’re leaving money on the table. Investment options vary by plan, so you’ll need to evaluate costs, risk and asset mix. Once you set up your 401(k), you’ll have money contributed automatically from your paychecks and invested in the funds you’ve selected. Rules around loans, early withdrawals and required minimum distributions can result in hefty penalties and fees if you’re not paying attention. If you’re working and already saving for retirement or plan to start socking away money soon, investing in a 401(k) plan can help you build a sizable nest egg. If you’re thinking about signing up for a 401(k), or simply want to know more about how to take full advantage of this type of retirement plan , here’s everything you need to know. What is a 401(k) plan and how does it work? A 401(k) plan is a tax-advantaged retirement savings tool offered by employers that allows eligible employees to contribute a portion of their salary up to a set amount each year. Unlike traditional pension plans, in which the employer promises a specified monthly benefit at retirement, 401(k) plans are funded by contributions deducted directly from the employee’s paycheck. Many companies match contributions up to a certain percentage of your annual salary. Getting started with a 401(k) While 401(k) plans are broadly similar, each employer’s plan can differ in important ways, such as whether you can take a loan against your savings or the types of investments available. Here are some key things to understand about your plan as you get started: What are your company’s eligibility requirements and will you automatically be enrolled in the plan? Will the plan automatically increase your contribution each year? Does your company offer a matching contribution and how much is it? What investment options does the plan offer? What do they cost and are those funds expensive relative to other available options? Does the plan offer any third-party advice (such as from the plan’s administrator) or any option to have the account managed for you? Can you invest in individual securities or do you have to stick to the funds provided in the plan? Can you take a loan against your account balance? How much does the loan cost? These are a few of the most important questions that you’ll want to answer as you get started with your 401(k). Don’t assume that all plans are alike, because your employer may change important aspects of the plan — even beyond the basics, such as its matching contribution. How much should you contribute to your 401(k)? When it comes to how much of your pay you should contribute, everyone has different financial needs in retirement, but there are some general rules you can follow. Contribute enough to take advantage of any matching dollars offered by your employer, says Catherine Golladay, former managing director at Charles Schwab. Whether your company match is dollar-for-dollar or something smaller, such as 50 cents on the dollar, don’t pass up the match. “Not doing so is like leaving money on the table,” she says. After saving enough to get the full employer match, Golladay suggests paying off high-interest debt and building an emergency fund . Then, go back and maximize tax-advantaged retirement accounts, either the 401(k) or retirement accounts, such as an individual retirement account (IRA) or Roth IRA . About 70 million Americans invest in 401(k)s and these retirement plans hold $8.9 trillion in assets, according to the Investment Company Institute , citing data as of Sept. 30, 2024. Plan participants can roll up substantial savings over the years of their working lives. Here’s how much the average American has in a 401(k) by age . Savings Icon Contribution limits for 401(k) plans In 2025, the IRS lets you contribute up to $23,500 to your 401(k). If you’re age 50 or older, you can add a $7,500 catch-up contribution. Employer matching doesn’t count toward this limit, so the total can be even higher. These limits typically go up every year to keep pace with inflation, so check annually to see if you can stash away more money. How employer matching works Employer matching is one of the biggest perks of a 401(k). If it’s offered at your job, your employer agrees to match a portion of your contributions . For example, they might match 100 percent of your contributions up to 4 percent of your salary. Some employers use a partial match — 50 percent of your contributions up to 6 percent of your salary, for example. But there’s a catch. You may need to stay with the company for a few years to fully “own” the match. This is called vesting. Some employers vest you immediately, while others make you wait a year or longer. As Golladay notes, getting that company match is essentially free money. Always contribute at least enough to get the full match, even if you can’t max out your account. Investing options for 401(k)s Most 401(k) plans have at least three investment choices, though others offer many more options. The average plan offers about 28 investment options, according to the Investment Company Institute. The menu could include a mix of investments, such as mutual funds, company stock and index funds, as well as stable value funds (or cash), bond funds and so-called “target date” funds, which adjust your portfolio based on your years until retirement. Fortunately, while you can pick your own funds if you’re the do-it-yourself type, you often don’t have to decide how to invest completely on your own. “Many of today’s 401(k) plans include professional investment advice, which can be key in helping the participant make investment decisions based on their overall financial picture,” Golladay says. Target-date funds (TDFs) have become popular options because they automatically adjust the mix of investments over time to align with investors’ risk tolerance as they approach retirement. For example, they move money from higher-risk stock funds to lower-risk bond funds as you near retirement, so that you have a more stable portfolio when you need the money. While target-date funds meet many investors’ demands, they don’t fit every individual’s needs. “While a TDF can be effective, a more tailored portfolio based on multiple data points about the investor may be the best option for some,” Golladay says. Here are other ways that you can maximize your 401(k) over time and generate higher returns. How to choose investments for your 401(k) Here are some smart moves to make with your 401(k), including how to earn a higher return by being aggressive with your investments and when not to: Design your investments with your age in mind. Avoid being too conservative when you’re younger and too aggressive when you’re old . If you’re in your 20s or 30s, you can afford to be more aggressive with your investments — investing more or all of your money into potentially higher-returning stocks or stock funds — because you have more time to recover from any market slumps along the way. As you age, however, your asset allocation should shift to more conservative investments — bonds or bond funds — to help protect your portfolio from the volatility of stocks. Index funds , such as those based on the S&P 500 index, are a good all-around pick for the stock portion of your portfolio. They’re a top recommendation from legendary investor Warren Buffett . Use any tools offered by your 401(k) provider. Many 401(k) plans offer tools (online calculators, worksheets) for determining risk tolerance and suitable investment options. If you’re not comfortable selecting funds or building an investment portfolio on your own, the best tool may be a competent financial advisor . Select an advisor who can design a long-term plan for you and help you stick to it — here’s how to find one . Time is your most important ally when investing for retirement. It’s less important to find the very best investment than it is to find a good investment and then buy and hold it for years, if not decades. Before you can decide how to allocate your contributions, determine your risk tolerance. It’s critical to know how well you can deal with volatility in your portfolio. You want to make sure you can sleep at night if financial markets turn turbulent and asset prices fall. But keep in mind that markets historically have recovered even after brutal bear markets , or stock market declines of 20 percent or more, which are typical during recessions. Lightbulb Icon Bankrate’s 401(K) calculator can help you estimate your savings over time. Why should you invest in a 401(k)? A 401(k) is an excellent investment option, and everyone should consider opening an account if they’re able to. Not all employers offer a 401(k) retirement plan, but if yours does, it’s a smart move to participate in one for the following reasons: Tax advantages A 401(k) lets you invest on a pre-tax basis, meaning you can take a tax break on this year’s taxes. You’ll be able to grow your assets tax-deferred until you withdraw them at retirement, when you’ll owe tax at ordinary income rates. A Roth 401(k) also offers tax benefits, but you’ll contribute money on an after-tax basis and enjoy tax-free withdrawals in retirement. Matching contributions Many employers offer free matching money if you contribute to your plan. You may be able to rake in an extra 3 or 4 percent of your salary this way, and it’s a risk-free return, though some plans require a few years for the match to vest. Automatic investments Once you set up your 401(k) investment plan, you’ll have money contributed automatically from your paychecks and invested in the funds you’ve selected. Attractive investments Many 401(k) plans offer historically high-return investments such as stocks or stock funds, so you’re likely to earn much more than you could in a traditional bank account over time. Still, some investors are worried about investing in stocks because of their riskiness. “All investments come with risk, but the fear of losing money should not inhibit someone from utilizing a 401(k),” Golladay says. While markets go up and go down, history has shown that over the long run, they move up. As measured by the S&P 500 index , over time stocks returned around 10 percent annually. The S&P 500 comprises hundreds of America’s largest publicly traded companies. That’s why investors, especially the risk-averse, should take a long-term approach to their retirement investments. “In times of market volatility or uncertainty, it’s important to remember that panic isn’t a strategy, especially with an investment as long-term in nature as a 401(k),” Golladay says. 401(k) loans: What they are and how they work If you need cash for an emergency or to pay down debt, your 401(k) plan may allow you to take out a loan and borrow up to 50 percent of your vested balance, but not more than $50,000. In most cases, you have to repay the money with interest within five years. While the interest payments go into your account — which means you are paying yourself back rather than giving your money to a bank — there are significant downsides. When you make a 401(k) withdrawal, that money is no longer invested in the market, and therefore, you could miss out on gains if asset prices continue to rise. Also, the original contributions to the account were made with pre-tax dollars, but the loan payments will be made with after-tax dollars. So, you’re losing a key tax benefit here. If you leave your employer, you’ll also have to repay your loan faster, generally when taxes are due for the current tax year. Try to avoid taking a 401(k) loan if at all possible, though it may be better than taking an early withdrawal. 401(k) FAQs — Bankrate’s Rachel Christian contributed to an update. Did you find this page helpful? Info Icon Help us improve our content
Markdown	[Skip to Main Content](https://www.bankrate.com/retirement/401k/#main-content) {closeNav(); \$refs.siteNavMenuButton.focus();}"\> - [Banking](https://www.bankrate.com/banking/) All Banking Checking & savings CDs Money market Banks [Explore all banking resources](https://www.bankrate.com/banking/) Banking Compare accounts - [Best high-yield savings accounts](https://www.bankrate.com/banking/savings/best-high-yield-interests-savings-accounts/) - [Best checking accounts](https://www.bankrate.com/banking/checking/best-checking-accounts/) - [Best free checking accounts](https://www.bankrate.com/banking/checking/best-free-checking-accounts/) Get guidance - [Savings calculator](https://www.bankrate.com/banking/savings/simple-savings-calculator/) - [All savings calculators](https://www.bankrate.com/banking/calculators/) - [Savings rate trends](https://www.bankrate.com/banking/savings/average-savings-interest-rates/) - [Savings resources](https://www.bankrate.com/banking/savings/) - [![](https://www.bankrate.com/f/102997/1440x1440/6efbd0a01f/savings-basics.png/m/50x50/filters:quality$90$:format$webp$) Savings basics 5 min read](https://www.bankrate.com/banking/savings/how-to-open-a-savings-account/) - [![](https://www.bankrate.com/f/102997/1440x1440/4c26764452/how-to-start-saving.png/m/50x50/filters:quality$90$:format$webp$) How to start saving 4 min read](https://www.bankrate.com/banking/savings/start-saving-from-scratch/) Compare accounts - [Best CD rates](https://www.bankrate.com/banking/cds/cd-rates/) - [Best 6-month CD rates](https://www.bankrate.com/banking/cds/best-6-month-cd-rates/) - [Best 1-year CD rates](https://www.bankrate.com/banking/cds/best-1-year-cd-rates/) - [Best 5-year CD rates](https://www.bankrate.com/banking/cds/best-5-year-cd-rates/) Get guidance - [CD calculator](https://www.bankrate.com/banking/cds/cd-calculator/) - [CD ladder calculator](https://www.bankrate.com/banking/cds/cd-ladder-calculator/) - [CD resources](https://www.bankrate.com/banking/cds/) - [![](https://www.bankrate.com/f/102997/1440x1440/a7b9c5207a/cd-basics.png/m/50x50/filters:quality$90$:format$webp$) CD basics 7 min read](https://www.bankrate.com/banking/cds/what-is-a-cd/) - [![](https://www.bankrate.com/f/102997/1440x1440/4b0ced533f/how-to-invest-with-cds.png/m/50x50/filters:quality$90$:format$webp$) How to invest with CDs 6 min read](https://www.bankrate.com/banking/cds/how-to-invest-in-cds/) Money market accounts Money market accounts are similar to savings accounts, but offer some checking features as well. [View MMA rates](https://www.bankrate.com/banking/money-market/rates/) Get guidance - [Money market basics](https://www.bankrate.com/banking/mma/what-is-a-money-market-account/) - [Money market vs savings accounts](https://www.bankrate.com/banking/money-market-account-vs-savings-account/) - [How to open an MMA](https://www.bankrate.com/banking/mma/how-to-open-a-money-market-account/) - [MMA resources](https://www.bankrate.com/banking/mma/) Banking Unlock financial rewards by signing up for a savings or checking account with a bonus offer. [Best bank bonuses](https://www.bankrate.com/banking/best-bank-account-bonuses-and-promotions/) Get guidance - [Best online banks](https://www.bankrate.com/banking/best-online-banks/) - [Best credit unions](https://www.bankrate.com/banking/best-credit-unions/) - [Bank reviews](https://www.bankrate.com/banking/reviews/) - [Federal Reserve news](https://www.bankrate.com/banking/federal-reserve/) - [![](https://www.bankrate.com/f/102997/1440x1440/d50369eb56/capital-one-review.png/m/50x50/filters:quality$90$:format$webp$) Capital One review Our take on Capital One Bank](https://www.bankrate.com/banking/reviews/capital-one/) - [![](https://www.bankrate.com/f/102997/1440x1440/d121fa8bad/marcus-review.png/m/50x50/filters:quality$90$:format$webp$) Marcus review Our take on Marcus by Goldman Sachs](https://www.bankrate.com/banking/reviews/marcus/) [Explore all banking resources](https://www.bankrate.com/banking/) - [Mortgages](https://www.bankrate.com/mortgages/) All Mortgages Purchase Refinance Real estate [Explore all mortgages resources](https://www.bankrate.com/mortgages/) Mortgages Compare rates - [Mortgage rates](https://www.bankrate.com/mortgages/mortgage-rates/) - [30-year mortgage rates](https://www.bankrate.com/mortgages/30-year-mortgage-rates/?disablePre=1) - [15-year mortgage rates](https://www.bankrate.com/mortgages/15-year-mortgage-rates/?disablePre=1) - [VA loan rates](https://www.bankrate.com/mortgages/va-loan-rates/) Get guidance - [Mortgage calculator](https://www.bankrate.com/mortgages/mortgage-calculator/) - [Amortization calculator](https://www.bankrate.com/mortgages/amortization-calculator/) - [Mortgage rate news](https://www.bankrate.com/mortgages/analysis/) - [Daily mortgage rates archive](https://www.bankrate.com/mortgages/todays-rates/) - [Read lender reviews](https://www.bankrate.com/mortgages/reviews/) - [![](https://www.bankrate.com/f/102997/1440x1440/4037e1299d/how-to-get-a-mortgage.png/m/50x50/filters:quality$90$:format$webp$) How to get a mortgage 11 min read](https://www.bankrate.com/mortgages/how-to-get-a-mortgage/) - [![](https://www.bankrate.com/f/102997/1440x1440/8889d553d1/best-mortgage-lenders-nav-imagery.png/m/50x50/filters:quality$90$:format$webp$) First-time homebuyer programs 11 min read](https://www.bankrate.com/mortgages/first-time-homebuyer-loans-and-programs/) Compare rates - [Refinance rates](https://www.bankrate.com/mortgages/refinance-rates/) - [Cash-out refinance rates](https://www.bankrate.com/mortgages/cash-out-refinance-rates/) - [30-year refinance rates](https://www.bankrate.com/mortgages/30-year-refinance-rates/?disablePre=1) - [15-year refinance rates](https://www.bankrate.com/mortgages/15-year-refinance-rates/?disablePre=1) Get guidance - [Mortgage refinance calculator](https://www.bankrate.com/mortgages/refinance-calculator/) - [Best refinance lenders](https://www.bankrate.com/mortgages/best-lenders/refinance-mortgage-lenders/) - [Best cash-out refinance lenders](https://www.bankrate.com/mortgages/best-lenders/cash-out-refinance-lenders/) - [Mortgage refinance resources](https://www.bankrate.com/mortgages/refinancing/) - [![](https://www.bankrate.com/f/102997/1442x1440/d475e14a0e/home-equity-lender-reviews-nav-imagery.png/m/50x50/filters:quality$90$:format$webp$) How to refinance your mortgage 12 min read](https://www.bankrate.com/mortgages/how-does-refinancing-a-mortgage-work/) - [![](https://www.bankrate.com/f/102997/1440x1440/e9e92b7729/home-equity-heloc-guide-nav-imagery.png/m/50x50/filters:quality$90$:format$webp$) Cash-out refinancing guide 9 min read](https://www.bankrate.com/mortgages/cash-out-refinancing/) Buying & selling Knowing what to look for in a real estate agent is critical. Here's how to choose the best fit for your needs. [Choosing an agent](https://www.bankrate.com/mortgages/finding-best-real-estate-agent/) Get guidance - [Home affordability calculator](https://www.bankrate.com/mortgages/home-affordability-calculator/) - [Cost of living calculator](https://www.bankrate.com/personal-finance/cost-of-living-calculator/) - [![](https://www.bankrate.com/f/102997/1440x1440/08fb8be334/buying-a-home.png/m/50x50/filters:quality$90$:format$webp$) Buying a home 12 min read](https://www.bankrate.com/mortgages/how-to-buy-a-house/) - [![](https://www.bankrate.com/f/102997/1440x1440/3b255b330e/selling-a-home-nav-imagery.png/m/50x50/filters:quality$90$:format$webp$) Selling a home 10 min read](https://www.bankrate.com/mortgages/how-to-sell-your-house/) [Explore all mortgages resources](https://www.bankrate.com/mortgages/) - [Investing](https://www.bankrate.com/investing/) All Investing Investing Retirement Financial advising [Explore all investing resources](https://www.bankrate.com/investing/) Investing Compare investments - [Best investments](https://www.bankrate.com/investing/best-investments/) - [Best index funds](https://www.bankrate.com/investing/best-index-funds/) - [Best long-term investments](https://www.bankrate.com/investing/best-long-term-investments/) - [Best short-term investments](https://www.bankrate.com/investing/best-short-term-investments/) Get guidance - [All investing calculators](https://www.bankrate.com/investing/calculators/) - [Brokerage reviews](https://www.bankrate.com/investing/brokerage-reviews/) - [Robo-advisor reviews](https://www.bankrate.com/investing/roboadvisor-reviews/) - [Low risk investments](https://www.bankrate.com/investing/low-risk-investments/) - [![](https://www.bankrate.com/f/102997/1440x1440/3cfd293f15/passive-income-ideas-nav-imagery.png/m/50x50/filters:quality$90$:format$webp$) Passive income ideas 26 min read](https://www.bankrate.com/investing/passive-income-ideas/) - [![](https://www.bankrate.com/f/102997/1440x1440/3d6f458d84/how-to-start-investing-nav-imagery.png/m/50x50/filters:quality$90$:format$webp$) How to start investing 7 min read](https://www.bankrate.com/investing/how-to-start-investing/) Compare plans - [Best retirement plans](https://www.bankrate.com/retirement/best-retirement-plans/) - [Best IRA accounts](https://www.bankrate.com/retirement/best-ira-accounts/) - [Best Roth IRA accounts](https://www.bankrate.com/investing/best-roth-ira/) - [Best 401(k) rollover options](https://www.bankrate.com/retirement/best-places-to-rollover-401k/) Get guidance - [401(k) calculator](https://www.bankrate.com/retirement/401-k-calculator/) - [Retirement plan calculator](https://www.bankrate.com/retirement/retirement-plan-calculator/) - [Roth IRA calculator](https://www.bankrate.com/retirement/roth-ira-plan-calculator/) - [All retirement calculators](https://www.bankrate.com/retirement/calculators/) - [Retirement resources](https://www.bankrate.com/retirement/) - [![](https://www.bankrate.com/f/102997/1440x1440/59a3f533a8/best-worst-states-for-retirement-nav-imagery.png/m/50x50/filters:quality$90$:format$webp$) Best & worst states for retirement 6 min read](https://www.bankrate.com/retirement/best-and-worst-states-for-retirement/) - [![](https://www.bankrate.com/f/102997/1440x1440/a6b1dc15ca/how-to-save-for-retirement-nav-imagery.png/m/50x50/filters:quality$90$:format$webp$) How to save for retirement 15 min read](https://www.bankrate.com/retirement/how-to-save-for-retirement/) Finding an advisor - [Find a financial advisor](https://www.bankrate.com/investing/financial-advisors/financial-advisor-matching/) - [Best financial advisors](https://www.bankrate.com/investing/financial-advisors/best-financial-advisors/) - [How to choose a financial advisor](https://www.bankrate.com/investing/financial-advisors/how-to-choose-a-financial-advisor/) - [Financial planner vs advisor](https://www.bankrate.com/investing/financial-advisors/financial-advisor-vs-financial-planner/) Get guidance - [What is financial planning?](https://www.bankrate.com/investing/financial-advisors/what-is-financial-planning/) - [What is a fiduciary?](https://www.bankrate.com/investing/financial-advisors/what-is-a-fiduciary/) - [What is a CFP?](https://www.bankrate.com/investing/financial-advisors/what-is-a-certified-financial-planner/) - [What is wealth management?](https://www.bankrate.com/investing/financial-advisors/what-is-wealth-management/) - [Financial advisor resources](https://www.bankrate.com/investing/financial-advisors/) - [![](https://www.bankrate.com/f/102997/1440x1440/1cdbf65950/what-is-wealth-management-s.png/m/50x50/filters:quality$90$:format$webp$) When to get an advisor 4 min read](https://www.bankrate.com/investing/financial-advisors/when-to-get-a-financial-advisor/) - [![](https://www.bankrate.com/f/102997/1440x1440/38750a2d5a/what-is-a-certified-financial-planner-s.png/m/50x50/filters:quality$90$:format$webp$) Pros & cons of financial advising 7 min read](https://www.bankrate.com/investing/financial-advisors/pros-cons-financial-advisor/) [Explore all investing resources](https://www.bankrate.com/investing/) - [Credit cards](https://www.bankrate.com/credit-cards/) All Credit cards Cards by category Cards by credit Tools & reviews Guides & resources [Explore all credit cards resources](https://www.bankrate.com/credit-cards/) Credit cards Compare cards - [Best cards of 2026](https://www.bankrate.com/credit-cards/best-credit-cards/) - [Best cash back cards](https://www.bankrate.com/credit-cards/cash-back/best-cash-back-cards/) - [Best balance transfer cards](https://www.bankrate.com/credit-cards/balance-transfer/best-balance-transfer-cards/) - [Best 0% APR cards](https://www.bankrate.com/credit-cards/zero-interest/best-zero-interest-cards/) - [Best travel cards](https://www.bankrate.com/credit-cards/travel/best-travel-cards/) - [Best rewards cards](https://www.bankrate.com/credit-cards/rewards/best-rewards-cards/) - [Best business cards](https://www.bankrate.com/credit-cards/business/best-business-cards/) - [Best sign up bonus cards](https://www.bankrate.com/credit-cards/rewards/best-bonus-offer-cards/) Find my matches - [![](https://www.bankrate.com/f/102997/1440x1440/4f02ac6944/cardmatch-nav-imagery.png/m/50x50/filters:quality$90$:format$webp$) CardMatch™ Get personalized card recommendations](https://www.bankrate.com/credit-cards/tools/cardmatch/) - [![](https://www.bankrate.com/f/102997/1440x1440/10ad7295ae/card-comparison-tool-nav-imagery.png/m/50x50/filters:quality$90$:format$webp$) Card comparison tool Compare credit cards side-by-side](https://www.bankrate.com/credit-cards/tools/compare/) See your card matches Answer a few quick questions and we’ll show you your top credit card options. [Find my matches](https://www.bankrate.com/credit-cards/tools/cardmatch/) Compare cards - [Excellent credit](https://www.bankrate.com/credit-cards/rewards/best-for-excellent-credit/) - [Good credit](https://www.bankrate.com/credit-cards/building-credit/best-for-good-credit/) - [Fair credit](https://www.bankrate.com/credit-cards/building-credit/best-for-fair-credit/) - [Bad credit](https://www.bankrate.com/credit-cards/bad-credit/best-for-bad-credit/) - [![](https://www.bankrate.com/f/102997/1440x1440/2e8651b174/how-to-build-credit-nav-imagery.png/m/50x50/filters:quality$90$:format$webp$) How to build credit 7 min read](https://www.bankrate.com/personal-finance/credit/how-to-build-credit-fast/) - [![](https://www.bankrate.com/f/102997/1440x1440/5a53191033/best-cards-for-building-credit-nav-imagery.png/m/50x50/filters:quality$90$:format$webp$) Best cards for building credit Find out which credit cards could help](https://www.bankrate.com/credit-cards/building-credit/best-for-no-credit-history/) See what the experts say Read in-depth credit card reviews to find out which cards have the best perks and more. [Read card reviews](https://www.bankrate.com/credit-cards/reviews/) Get guidance - [Credit card payoff calculator](https://www.bankrate.com/credit-cards/tools/credit-card-payoff-calculator/) - [Balance transfer calculator](https://www.bankrate.com/credit-cards/tools/credit-card-balance-transfer-calculator/) - [Credit utilization calculator](https://www.bankrate.com/credit-cards/tools/credit-utilization-calculator/) - [Points and miles calculator](https://www.bankrate.com/credit-cards/tools/points-and-miles-calculator/) - [All credit card calculators](https://www.bankrate.com/credit-cards/tools/) - [![](https://www.bankrate.com/f/102997/1440x1440/43548bf9cd/spender-type-tool-nav-imagery.png/m/50x50/filters:quality$90$:format$webp$) Spender type tool Find cards that fit your needs](https://www.bankrate.com/credit-cards/tools/spender-type-tool/) Get advice - [Credit cards 101](https://www.bankrate.com/credit-cards/advice/) - [Balance transfer advice](https://www.bankrate.com/credit-cards/balance-transfer/) - [Zero interest credit cards](https://www.bankrate.com/credit-cards/zero-interest/) - [Rewards credit card advice](https://www.bankrate.com/credit-cards/rewards/) - [Cash back credit card advice](https://www.bankrate.com/credit-cards/cash-back/) - [Travel credit card advice](https://www.bankrate.com/credit-cards/travel/) - [Business credit card advice](https://www.bankrate.com/credit-cards/business/) Build credit - [Advice for bad credit](https://www.bankrate.com/credit-cards/bad-credit/) - [Rebuilding credit score](https://www.bankrate.com/credit-cards/building-credit/) [Explore all credit cards resources](https://www.bankrate.com/credit-cards/) - [Loans](https://www.bankrate.com/loans/) All Loans Personal loans Auto loans Student loans Small business loans [Explore all loans resources](https://www.bankrate.com/loans/) Loans Compare lenders - [Best personal loans](https://www.bankrate.com/loans/personal-loans/rates/) - [Best personal loans for bad credit](https://www.bankrate.com/loans/personal-loans/bad-credit-loans/) - [Best debt consolidation loans](https://www.bankrate.com/loans/personal-loans/debt-consolidation-loans/) - [Best home improvement loans](https://www.bankrate.com/loans/home-improvement/rates/) Get guidance - [Personal loan resources](https://www.bankrate.com/loans/personal-loans/) - [Personal loan lender reviews](https://www.bankrate.com/loans/personal-loans/reviews/) - [Personal loans calculator](https://www.bankrate.com/loans/personal-loans/personal-loan-calculator/) - [Average personal loan interest rates](https://www.bankrate.com/loans/personal-loans/average-personal-loan-rates/) - [![](https://www.bankrate.com/f/102997/1440x1440/38750a2d5a/what-is-a-certified-financial-planner-s.png/m/50x50/filters:quality$90$:format$webp$) Personal loan basics 9 min read](https://www.bankrate.com/loans/personal-loans/what-is-a-personal-loan/) - [![](https://www.bankrate.com/f/102997/1440x1440/4c26764452/how-to-start-saving.png/m/50x50/filters:quality$90$:format$webp$) How to get a personal loan 11 min read](https://www.bankrate.com/loans/personal-loans/how-to-get-personal-loan/) Compare lenders - [Best auto loans](https://www.bankrate.com/loans/auto-loans/rates/) - [Best auto loan refinance rates](https://www.bankrate.com/loans/auto-loans/refinance-rates/) - [Best car loans for bad credit](https://www.bankrate.com/loans/auto-loans/bad-credit-loans/) Get guidance - [Auto loan resources](https://www.bankrate.com/loans/auto-loans/) - [Auto loan lender reviews](https://www.bankrate.com/loans/auto-loans/reviews/) - [Auto loan calculator](https://www.bankrate.com/loans/auto-loans/auto-loan-calculator/) - [Auto loan refinancing guide](https://www.bankrate.com/loans/auto-loans/how-to-refinance-car-loan/) - [![](https://www.bankrate.com/f/102997/1440x1440/d1a328a134/auto-loan-refinancing-guide-nav.png/m/50x50/filters:quality$90$:format$webp$) How to get the best auto loan rate 10 min read](https://www.bankrate.com/loans/auto-loans/how-to-get-the-best-auto-loan-rate/) - [![](https://www.bankrate.com/f/102997/720x720/c481afa0d2/auto-loan-refinancing-guide-s.jpg/m/50x50/filters:quality$90$:format$webp$) Auto loan basics 5 min read](https://www.bankrate.com/loans/auto-loans/what-is-an-auto-loan/) Compare lenders - [Student loan rates](https://www.bankrate.com/loans/student-loans/rates/) - [Student loan refinancing rates](https://www.bankrate.com/loans/student-loans/refinance-rates/) - [Best bad credit student loans](https://www.bankrate.com/loans/student-loans/bad-credit-loans/) Get guidance - [Student loan resources](https://www.bankrate.com/loans/student-loans/) - [Student loan lender reviews](https://www.bankrate.com/loans/student-loans/reviews/) - [Student loan calculator](https://www.bankrate.com/loans/student-loans/student-loan-calculator/) - [Student loan refinance calculator](https://www.bankrate.com/loans/student-loans/student-loan-refinance-calculator/) - [![](https://www.bankrate.com/f/102997/1440x1440/3d6f458d84/how-to-start-investing-nav-imagery.png/m/50x50/filters:quality$90$:format$webp$) Private student loan basics 10 min read](https://www.bankrate.com/loans/student-loans/private-student-loans-guide/) - [![](https://www.bankrate.com/f/102997/1440x1440/4c26764452/how-to-start-saving.png/m/50x50/filters:quality$90$:format$webp$) How to get a student loan 11 min read](https://www.bankrate.com/loans/student-loans/how-to-get-student-loan/) Compare lenders - [Best small business loans](https://www.bankrate.com/loans/small-business/best-small-business-loans/) - [Bad credit small business loans](https://www.bankrate.com/loans/small-business/bad-credit-business-loans/) - [Business lines of credit](https://www.bankrate.com/loans/small-business/business-line-of-credit/) - [Small business loan banks](https://www.bankrate.com/loans/small-business/best-banks-for-small-business-loans/) Get guidance - [Small business loans resources](https://www.bankrate.com/loans/small-business/) - [Small business loan reviews](https://www.bankrate.com/loans/small-business/reviews/) - [Small business loan calculator](https://www.bankrate.com/loans/small-business/business-loan-calculator/) - [![](https://www.bankrate.com/f/102997/1440x1440/4c26764452/how-to-start-saving.png/m/50x50/filters:quality$90$:format$webp$) How small business loans work 9 min read](https://www.bankrate.com/loans/small-business/how-do-small-business-loans-work/) - [![](https://www.bankrate.com/f/102997/1440x1440/38750a2d5a/what-is-a-certified-financial-planner-s.png/m/50x50/filters:quality$90$:format$webp$) How to get a business loan 9 min read](https://www.bankrate.com/loans/small-business/how-to-get-a-business-loan/) [Explore all loans resources](https://www.bankrate.com/loans/) - [Home equity](https://www.bankrate.com/home-equity/) All Home equity HELOC Home equity loans [Explore all home equity resources](https://www.bankrate.com/home-equity/) Home equity HELOC A HELOC is a variable-rate line of credit that lets you borrow funds for a set period and repay them later. [HELOC Rates](https://www.bankrate.com/home-equity/heloc-rates/) Home equity basics - [Best HELOC lenders](https://www.bankrate.com/home-equity/heloc-lenders/) - [HELOC calculator](https://www.bankrate.com/home-equity/heloc-calculator/) - [What is a HELOC?](https://www.bankrate.com/home-equity/what-is-heloc/) - [Pros and cons of HELOCs](https://www.bankrate.com/home-equity/pros-cons-of-home-equity-lines/) - [Home equity lender reviews](https://www.bankrate.com/home-equity/reviews/) - [![](https://www.bankrate.com/f/102997/1440x1440/e9e92b7729/home-equity-heloc-guide-nav-imagery.png/m/50x50/filters:quality$90$:format$webp$) What is home equity? 8 min read](https://www.bankrate.com/home-equity/what-is-home-equity/) - [![Home purchase](https://www.bankrate.com/f/102997/1280x720/98576f9f53/home-purchase.jpeg/m/50x50/filters:quality$90$:format$webp$) How to calculate home equity 6 min read](https://www.bankrate.com/home-equity/how-to-calculate-equity-in-your-home/) Home equity loans Home equity loans let you borrow a lump sum at a fixed rate, based on how much of the home you own outright. [Home equity loan rates](https://www.bankrate.com/home-equity/home-equity-loan-rates/) Get guidance - [What is a home equity loan?](https://www.bankrate.com/home-equity/what-is-home-equity-loan/) - [Home equity loan pros and cons](https://www.bankrate.com/home-equity/pros-cons-home-equity-loan/) - [Home equity loan requirements](https://www.bankrate.com/home-equity/requirements-to-borrow-from-home-equity/) - [HELOC vs home equity loan](https://www.bankrate.com/home-equity/home-equity-loan-vs-line-of-credit/) - [How to build home equity](https://www.bankrate.com/home-equity/how-to-build-equity-in-your-home/) - [![](https://www.bankrate.com/f/102997/721x720/bad3fd8f56/heloc-lender-reviews-s.jpg/m/50x50/filters:quality$90$:format$webp$) Best home equity loan lenders Compare top home equity lenders](https://www.bankrate.com/home-equity/home-equity-loan-lenders/) - [![CD Rates](https://www.bankrate.com/f/102997/1920x1080/2654611691/cd-rates.jpeg/m/50x50/filters:quality$90$:format$webp$) Home equity calculator Calculate how much you can borrow](https://www.bankrate.com/home-equity/home-equity-calculator/) [Explore all home equity resources](https://www.bankrate.com/home-equity/) - [Insurance](https://www.bankrate.com/insurance/) All Insurance Auto insurance Home insurance Tools & reviews [Explore all insurance resources](https://www.bankrate.com/insurance/) Insurance Compare rates - [Car insurance quotes](https://www.bankrate.com/insurance/car/car-insurance-quotes/) - [Best car insurance companies](https://www.bankrate.com/insurance/car/best-car-insurance-companies/) - [Cheapest car insurance companies](https://www.bankrate.com/insurance/car/cheap-car-insurance-companies/) - [Compare car insurance rates](https://www.bankrate.com/insurance/car/average-cost-of-car-insurance/) Popular states - [California](https://www.bankrate.com/insurance/car/california/) - [Florida](https://www.bankrate.com/insurance/car/florida/) - [Texas](https://www.bankrate.com/insurance/car/texas/) - [Ohio](https://www.bankrate.com/insurance/car/ohio/) - [Auto insurance by state](https://www.bankrate.com/insurance/car/states/) - [![Person smiling while sitting in car](https://www.bankrate.com/f/102997/1440x1440/5bfb00cc0b/auto-insurance-by-state.png/m/50x50/filters:quality$90$:format$webp$) How much is car insurance? Average cost of car insurance](https://www.bankrate.com/insurance/car/average-cost-of-car-insurance/) - [![](https://www.bankrate.com/f/102997/1440x1440/20e5cbc3e7/how-much-is-car-insurance-nav.png/m/50x50/filters:quality$90$:format$webp$) Car insurance resources Learn more about car insurance](https://www.bankrate.com/insurance/car/) Compare rates - [Home insurance quotes](https://www.bankrate.com/insurance/homeowners-insurance/home-insurance-quotes/) - [Best home insurance companies](https://www.bankrate.com/insurance/homeowners-insurance/best-home-insurance-companies/) - [Cheapest home insurance companies](https://www.bankrate.com/insurance/homeowners-insurance/cheap-homeowners-insurance/) - [Best home and auto bundles](https://www.bankrate.com/insurance/car-and-home-insurance-bundle/) Popular states - [California](https://www.bankrate.com/insurance/homeowners-insurance/california/) - [Florida](https://www.bankrate.com/insurance/homeowners-insurance/florida/) - [Texas](https://www.bankrate.com/insurance/homeowners-insurance/texas/) - [New Jersey](https://www.bankrate.com/insurance/homeowners-insurance/new-jersey/) - [Home insurance by state](https://www.bankrate.com/insurance/homeowners-insurance/states/) - [![](https://www.bankrate.com/f/102997/1440x1440/8af9dfc8a2/home-insurance-by-state-nav-imagery.png/m/50x50/filters:quality$90$:format$webp$) Home insurance cost Average cost of home insurance](https://www.bankrate.com/insurance/homeowners-insurance/homeowners-insurance-cost/) - [![](https://www.bankrate.com/f/102997/1440x1440/e85a91b40b/how-much-is-home-insurance-nav-imagery.png/m/50x50/filters:quality$90$:format$webp$) Home insurance resources Learn more about home insurance](https://www.bankrate.com/insurance/homeowners-insurance/) Calculators - [Car insurance calculator](https://www.bankrate.com/insurance/car/car-insurance-calculator/) - [Home insurance calculator](https://www.bankrate.com/insurance/homeowners-insurance/home-insurance-calculator/) Get guidance - [Allstate insurance review](https://www.bankrate.com/insurance/reviews/allstate/) - [Progressive insurance review](https://www.bankrate.com/insurance/reviews/progressive/) - [State Farm insurance review](https://www.bankrate.com/insurance/reviews/state-farm/) - [Travelers insurance review](https://www.bankrate.com/insurance/reviews/travelers/) - [Lemonade insurance review](https://www.bankrate.com/insurance/reviews/lemonade/) - [![Design element two people looking at a car](https://www.bankrate.com/f/102997/475x270/8e81cf93f6/insurance_best_car_insurance_companies.webp/m/50x50/filters:quality$90$:format$webp$) All insurance company reviews Browse insurance carrier reviews](https://www.bankrate.com/insurance/reviews/) [Explore all insurance resources](https://www.bankrate.com/insurance/) { closeNav(); closeSearch(); }" :class="{ 'is-active': isNavOpen \\|\\| (\$el.dataset.showOnSearch === '1' && isSearchOpen) }"\> { closeNav(); closeSearch(); }" :class="{ 'is-active': isNavOpen \\|\\| (\$el.dataset.showOnSearch === '1' && isSearchOpen) }"\> 0; } } catch (error) { this.searchSuggestions = \[\]; this.showSearchAutocomplete = false; } } }" data-beam-element-viewed data-type="drawer" data-location="site-nav" data-name="search flyout" data-position="top" data-text="open search flyout" data-outcome="open search flyout container"\> Popular searches - [Mortgage rates](https://www.bankrate.com/mortgages/mortgage-rates/) - [Balance transfer credit cards](https://www.bankrate.com/credit-cards/balance-transfer/best-balance-transfer-cards/) - [Car insurance quotes](https://www.bankrate.com/insurance/car/car-insurance-quotes/) Tools - [Mortgage calculator](https://www.bankrate.com/mortgages/mortgage-calculator/) - [Loan calculator](https://www.bankrate.com/loans/loan-calculator/) - [CD calculator](https://www.bankrate.com/banking/cds/cd-calculator/) 1. [Retirement](https://www.bankrate.com/retirement/) › 2. A complete guide to 401(k) retirement plans: What is a 401(k)? Advertiser Disclosure # A complete guide to 401(k) retirement plans: What is a 401(k)? ![James Royal, Ph.D.](https://www.bankrate.com/2021/10/26151853/James-Royal-headshot-scaled-square.jpg?auto=webp&quality=85&width=24&height=24&fit=cover&enable=upscale&crop=1:1,smart) ![Erin Kennedy](https://www.bankrate.com/brp/2024/08/22150559/Erin-Kennedy-3668-2-scaled.jpg?auto=webp&quality=85&width=24&height=24&fit=cover&enable=upscale&crop=1:1,smart) Written by James Royal, Ph.D. , ![](https://www.bankrate.com/2021/10/26151853/James-Royal-headshot-scaled-square.jpg?auto=webp&quality=85&width=64&height=64&fit=cover&enable=upscale&crop=1:1,smart) [James Royal, Ph.D.](https://www.bankrate.com/authors/james-royal/) Former Principal Writer, Investing and Wealth Management Expertise - • Investing - • Wealth management Former Bankrate principal writer and editor James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more. [Read more](https://www.bankrate.com/authors/james-royal/) - [Connect with James Royal, Ph.D. on Twitter](https://twitter.com/JimRoyalPhD) - [Connect with James Royal, Ph.D. on LinkedIn](https://www.linkedin.com/in/james-royal-phd-809b929/) - [Get in contact with James Royal, Ph.D. via Email](mailto:jroyal@redventures.com) Close [James Royal, Ph.D.](https://www.bankrate.com/authors/james-royal/), Edited by Erin Kennedy ![](https://www.bankrate.com/brp/2024/08/22150559/Erin-Kennedy-3668-2-scaled.jpg?auto=webp&quality=85&width=64&height=64&fit=cover&enable=upscale&crop=1:1,smart) [Erin Kennedy](https://www.bankrate.com/authors/erin-kennedy/) Former Senior Editor, Investing Expertise - • Stocks - • Investing Former Bankrate senior investing editor Erin Kennedy has spent over a dozen years editing and publishing in the financial media space. Her longtime goal has been to help educate people on topics in finance that can seem [uninteresting](https://www.bankrate.com/investing/time-value-of-money/) or too complex, and she embraces a reader-centered mindset. [Read more](https://www.bankrate.com/authors/erin-kennedy/) - [Connect with Erin Kennedy on LinkedIn](https://www.linkedin.com/in/erin-kennedy-4b36aa75/) Close [Erin Kennedy](https://www.bankrate.com/authors/erin-kennedy/) Published on June 02, 2025 \\| 7 min read Bankrate is always editorially independent. While we adhere to strict editorial integrity , this post may contain references to products from our partners. Here's an explanation for how we make money . Our Bankrate promise is to ensure everything we publish is objective, accurate and trustworthy. ![Office employees meet in a large room](https://www.bankrate.com/2021/08/15143351/What-is-a-401k.jpeg?auto=webp&optimize=high&crop=16:9) Morsa Images/Getty Images Table of contents - [What is a 401(k) plan and how does it work?](https://www.bankrate.com/retirement/401k/#what-is) - [Getting started with a 401(k)](https://www.bankrate.com/retirement/401k/#getting-started) - [How much should you contribute to your 401(k)?](https://www.bankrate.com/retirement/401k/#contributions) - [Investing options for 401(k)s](https://www.bankrate.com/retirement/401k/#investments) - [How to choose investments for your 401(k)](https://www.bankrate.com/retirement/401k/#how-to-choose) - [Why should you invest in a 401(k)?](https://www.bankrate.com/retirement/401k/#why-invest) - [401(k) loans: What they are and how they work](https://www.bankrate.com/retirement/401k/#loans) - [401(k) FAQs](https://www.bankrate.com/retirement/401k/#faqs) Table of contents Back to top ## Key takeaways - A 401(k) plan is a tax-advantaged way to invest for retirement, often with employer contributions. - You should at least contribute enough to get your employer’s full match — otherwise you’re leaving money on the table. - Investment options vary by plan, so you’ll need to evaluate costs, risk and asset mix. - Once you set up your 401(k), you’ll have money contributed automatically from your paychecks and invested in the funds you’ve selected. - Rules around loans, early withdrawals and required minimum distributions can result in hefty penalties and fees if you’re not paying attention. If you’re working and already saving for retirement or plan to start socking away money soon, investing in a 401(k) plan can help you build a sizable nest egg. If you’re thinking about signing up for a 401(k), or simply want to know more about how to take full advantage of this [type of retirement plan](https://www.bankrate.com/retirement/best-retirement-plans/), here’s everything you need to know. ## ## What is a 401(k) plan and how does it work? A 401(k) plan is a tax-advantaged retirement savings tool offered by employers that allows eligible employees to contribute a portion of their salary up to a set amount each year. Unlike traditional pension plans, in which the employer promises a specified monthly benefit at retirement, 401(k) plans are funded by contributions deducted directly from the employee’s paycheck. Many companies match contributions up to a certain percentage of your annual salary. ## ## Getting started with a 401(k) While 401(k) plans are broadly similar, each employer’s plan can differ in important ways, such as whether you can take a loan against your savings or the types of investments available. Here are some key things to understand about your plan as you get started: - What are your company’s eligibility requirements and will you automatically be enrolled in the plan? - Will the plan automatically increase your contribution each year? - Does your company offer a matching contribution and how much is it? - What investment options does the plan offer? What do they cost and are those funds expensive relative to other available options? - Does the plan offer any third-party advice (such as from the plan’s administrator) or any option to have the account managed for you? - Can you invest in individual securities or do you have to stick to the funds provided in the plan? - Can you take a loan against your account balance? How much does the loan cost? These are a few of the most important questions that you’ll want to answer as you get started with your 401(k). Don’t assume that all plans are alike, because your employer may change important aspects of the plan — even beyond the basics, such as its matching contribution. ## ## How much should you contribute to your 401(k)? When it comes to how much of your pay you should contribute, everyone has different financial needs in retirement, but there are some general rules you can follow. Contribute enough to take advantage of any matching dollars offered by your employer, says Catherine Golladay, former managing director at Charles Schwab. Whether your company match is dollar-for-dollar or something smaller, such as 50 cents on the dollar, don’t pass up the match. “Not doing so is like leaving money on the table,” she says. After saving enough to get the full employer match, Golladay suggests paying off high-interest debt and [building an emergency fund](https://www.bankrate.com/banking/savings/starting-an-emergency-fund/). Then, go back and maximize tax-advantaged retirement accounts, either the 401(k) or retirement accounts, such as an [individual retirement account (IRA) or Roth IRA](https://www.bankrate.com/investing/traditional-ira-vs-roth-ira/). About 70 million Americans invest in 401(k)s and these retirement plans hold \$8.9 trillion in assets, according to the [Investment Company Institute](https://www.ici.org/401k), citing data as of Sept. 30, 2024. Plan participants can roll up substantial savings over the years of their working lives. [Here’s how much the average American has in a 401(k) by age](https://www.bankrate.com/retirement/average-401k-balance-by-age/). Bankrate’s calculator can help you decide [which tax-advantaged account to stash additional funds in](https://www.bankrate.com/retirement/401-k-or-roth-ira-calculator/). ### Contribution limits for 401(k) plans In 2025, the IRS lets you contribute up to \$23,500 to your 401(k). If you’re age 50 or older, you can add a \$7,500 catch-up contribution. Employer matching doesn’t count toward this limit, so the total can be even higher. These limits typically go up every year to keep pace with inflation, so check annually to see if you can stash away more money. ### How employer matching works Employer matching is one of the biggest perks of a 401(k). If it’s offered at your job, your employer agrees to [match a portion of your contributions](https://www.bankrate.com/retirement/401k-match/). For example, they might match 100 percent of your contributions up to 4 percent of your salary. Some employers use a partial match — 50 percent of your contributions up to 6 percent of your salary, for example. But there’s a catch. You may need to stay with the company for a few years to fully “own” the match. [This is called vesting.](https://www.bankrate.com/retirement/what-it-means-to-be-vested/) Some employers vest you immediately, while others make you wait a year or longer. As Golladay notes, getting that company match is essentially free money. Always contribute at least enough to get the full match, even if you can’t max out your account. ## ## Investing options for 401(k)s Most 401(k) plans have at least three investment choices, though others offer many more options. The average plan offers about 28 investment options, according to the Investment Company Institute. The menu could include a mix of investments, such as mutual funds, company stock and index funds, as well as stable value funds (or cash), bond funds and so-called “target date” funds, which adjust your portfolio based on your years until retirement. Fortunately, while you can pick your own funds if you’re the do-it-yourself type, you often don’t have to decide how to invest completely on your own. “Many of today’s 401(k) plans include professional investment advice, which can be key in helping the participant make investment decisions based on their overall financial picture,” Golladay says. [Target-date funds](https://www.bankrate.com/retirement/target-date-funds-pros-and-cons/) (TDFs) have become popular options because they automatically adjust the mix of investments over time to align with investors’ risk tolerance as they approach retirement. For example, they move money from higher-risk stock funds to lower-risk bond funds as you near retirement, so that you have a more stable portfolio when you need the money. While target-date funds meet many investors’ demands, they don’t fit every individual’s needs. “While a TDF can be effective, a more tailored portfolio based on multiple data points about the investor may be the best option for some,” Golladay says. Here are [other ways that you can maximize your 401(k)](https://www.bankrate.com/retirement/401k-plan-smart-moves-to-make/) over time and generate higher returns. ## ## How to choose investments for your 401(k) Here are some smart moves to make with your 401(k), including how to earn a higher return by being aggressive with your investments and when not to: - Design your investments with your age in mind. [Avoid being too conservative](https://www.bankrate.com/retirement/signs-your-401k-portfolio-is-too-conservative/) when you’re younger and [too aggressive when you’re old](https://www.bankrate.com/retirement/signs-your-401k-portfolio-is-too-aggressive/). If you’re in your 20s or 30s, you can afford to be more aggressive with your investments — investing more or all of your money into potentially higher-returning stocks or stock funds — because you have more time to recover from any market slumps along the way. As you age, however, your asset allocation should shift to more conservative investments — bonds or bond funds — to help protect your portfolio from the volatility of stocks. - [Index funds](https://www.bankrate.com/investing/what-is-an-index-fund/), such as those based on the S\&P 500 index, are a good all-around pick for the stock portion of your portfolio. They’re a [top recommendation from legendary investor Warren Buffett](https://www.bankrate.com/investing/good-investment-advice-to-follow/). - Use any tools offered by your 401(k) provider. Many 401(k) plans offer tools (online calculators, worksheets) for determining risk tolerance and suitable investment options. - If you’re not comfortable selecting funds or building an investment portfolio on your own, the best tool may be a competent [financial advisor](https://www.bankrate.com/investing/financial-advisors/financial-advisor-matching/?utm_source=BRarticle). Select an advisor who can design a long-term plan for you and help you stick to it — [here’s how to find one](https://www.bankrate.com/investing/financial-advisors/how-to-choose-a-financial-advisor/). - Time is your most important ally when investing for retirement. It’s less important to find the very best investment than it is to find a good investment and then buy and hold it for years, if not decades. Before you can decide how to allocate your contributions, determine your risk tolerance. It’s critical to know how well you can deal with volatility in your portfolio. You want to make sure you can sleep at night if financial markets turn turbulent and asset prices fall. But keep in mind that markets historically have recovered even after [brutal bear markets](https://www.bankrate.com/investing/what-is-a-bear-market/), or stock market declines of 20 percent or more, which are typical during recessions. Bankrate’s [401(K) calculator](https://www.bankrate.com/retirement/401-k-calculator/) can help you estimate your savings over time. ## ## Why should you invest in a 401(k)? A 401(k) is an excellent investment option, and everyone should consider opening an account if they’re able to. Not all employers offer a 401(k) retirement plan, but if yours does, it’s a smart move to participate in one for the following reasons: Tax advantages A 401(k) lets you invest on a pre-tax basis, meaning you can take a tax break on this year’s taxes. You’ll be able to grow your assets tax-deferred until you withdraw them at retirement, when you’ll owe tax at ordinary income rates. A [Roth 401(k)](https://www.bankrate.com/retirement/roth-401k/) also offers tax benefits, but you’ll contribute money on an after-tax basis and enjoy tax-free withdrawals in retirement. Matching contributions Many employers offer free matching money if you contribute to your plan. You may be able to rake in an extra 3 or 4 percent of your salary this way, and it’s a risk-free return, though some plans require a few years for the match to vest. Automatic investments Once you set up your 401(k) investment plan, you’ll have money contributed automatically from your paychecks and invested in the funds you’ve selected. Attractive investments Many 401(k) plans offer historically high-return investments such as stocks or stock funds, so you’re likely to earn much more than you could in a traditional bank account over time. Still, some investors are worried about investing in stocks because of their riskiness. “All investments come with risk, but the fear of losing money should not inhibit someone from utilizing a 401(k),” Golladay says. While markets go up and go down, history has shown that over the long run, they move up. As measured by the [S\&P 500 index](https://www.bankrate.com/investing/what-is-sp-500/), over time stocks returned around 10 percent annually. The S\&P 500 comprises hundreds of America’s largest publicly traded companies. That’s why investors, especially the risk-averse, should take a long-term approach to their retirement investments. “In times of market volatility or uncertainty, it’s important to remember that panic isn’t a strategy, especially with an investment as long-term in nature as a 401(k),” Golladay says. ## ## 401(k) loans: What they are and how they work If you need cash for an emergency or to pay down debt, your 401(k) plan may allow you to take out a loan and borrow up to 50 percent of your vested balance, but not more than \$50,000. In most cases, you have to repay the money with interest within five years. While the interest payments go into your account — which means you are paying yourself back rather than giving your money to a bank — there are significant downsides. When you make a 401(k) withdrawal, that money is no longer invested in the market, and therefore, you could miss out on gains if asset prices continue to rise. Also, the original contributions to the account were made with pre-tax dollars, but the loan payments will be made with after-tax dollars. So, you’re losing a key tax benefit here. If you leave your employer, you’ll also have to repay your loan faster, generally when taxes are due for the current tax year. Try to avoid taking a [401(k) loan](https://www.bankrate.com/retirement/borrow-from-401k-loan/) if at all possible, though it may be better than taking an early withdrawal. ## ## 401(k) FAQs - ### What’s the difference between a traditional 401(k) and a Roth 401(k)? The 401(k) has two varieties: the traditional 401(k) and the Roth 401(k). - Traditional 401(k): Employee contributions are made with pre-tax dollars, lowering your taxable income now. Your contributions grow tax-deferred until withdrawn, meaning all of your money is working for you in the market. - Roth 401(k): Contributions are made with after-tax dollars, meaning you don’t get a tax benefit today. Your contributions grow tax-free until withdrawn in retirement and [then you’ll be able to avoid tax entirely on the distributions](https://www.bankrate.com/retirement/roth-401k/). - ### What happens to your 401(k) when you switch jobs? Fortunately, a 401(k) offers portability, so you don’t need to be stuck in a former plan if you don’t like it. Workers have a few options for dealing with their [old 401(k) after leaving a company](https://www.bankrate.com/retirement/how-to-find-lost-401k/): - Roll it over into an IRA. - Keep the assets in the former employer’s plan, if permitted. - [Roll it over into a new employer’s plan](https://www.bankrate.com/retirement/401k-rollover-guide/), if permitted. You may also have the option of taking a cash distribution, or lump sum, but you’ll probably get hit with penalties and taxes if you’re not at least of retirement age. Whichever path you choose, it’s important to understand the benefits and limitations of each option according to your unique financial situation, Golladay says. - ### What is the early withdrawal rule for a 401(k)? Taking money out of your 401(k) before age 59½ is expensive. You’ll owe income tax and a 10 percent IRS penalty unless you qualify for an exception. Exceptions include disability, certain medical bills, a first-time home purchase or separation from your job after age 55. But even with an exception, you’re robbing your future self. Taking an early distribution could be disastrous for your retirement, and more than half of Americans say they are behind in saving for retirement, [according to a Bankrate survey](https://www.bankrate.com/retirement/retirement-savings-survey-october-2022/). Unless you’re in a serious emergency and have no other options, leave your 401(k) alone until retirement. - ### Can you lose money in a 401(k)? The short answer is yes. The longer answer is that whether you make money or lose money in a 401(k) depends on your investments. Some investments, such as [U.S. government bonds](https://www.bankrate.com/investing/how-to-invest-in-bonds/), may have explicit promises to be repaid, or you may have an investment in cash, which will not decline in value, though it will lose purchasing power over time due to inflation. Other market-based investments, including government bonds, are subject to fluctuations in value, so you may not receive back what you put into the investment. For example, while holders of government bonds will receive their principal back at maturity, the bonds may fluctuate a lot in the interim. So if you have to sell the bond before it matures, you may not receive the price you paid for it. At maturity, you will receive full value, however. Assets such as stocks can fluctuate a lot more in the short term than bonds. That’s why financial advisors [recommend having a longer time horizon](https://www.bankrate.com/investing/best-long-term-investments/) for stocks. You’ll need to ride out the market’s ups and downs in order to achieve stocks’ potentially more attractive long-term returns. However, regardless of your investment choices, you’ll still pay fees for any funds that you’re invested in. Your long-term performance depends on those fees, so it’s important to minimize them where you can. And don’t think that a higher-priced fund is necessarily better than a low-cost fund. Often higher-priced funds have lower long-term returns than the lower-fee funds. - ### What are required minimum distributions (RMDs)? Starting at age 73, you’re required to start taking money out of your traditional 401(k). These are called [required minimum distributions, or RMDs](https://www.bankrate.com/retirement/required-minimum-distribution-rmd/). The IRS forces you to withdraw a certain amount each year so it can finally collect taxes on your tax-deferred savings. If you skip or shortchange your RMD, the penalty is steep: up to 25 percent of what you should have withdrawn. It’s important to know your RMD schedule, calculate the right amount to withdraw and plan ahead because the IRS won’t remind you. — Bankrate’s [Rachel Christian](https://www.bankrate.com/authors/rachel-christian/) contributed to an update. ### Did you find this page helpful? Why we ask for feedback Your feedback helps us improve our content and services. It takes less than a minute to complete. Your responses are anonymous and will only be used for improving our website. Help us improve our content Yes No Thank you for your feedback\! Your input helps us improve our content and services. Cite us Share this article Share this article Close ![](https://www.bankrate.com/2021/10/26151853/James-Royal-headshot-scaled-square.jpg?auto=webp&quality=85&width=96&height=96&fit=cover&enable=upscale&crop=1:1,smart) Written by [James Royal, Ph.D.](https://www.bankrate.com/authors/james-royal/) Former Principal Writer, Investing and Wealth Management - [Connect with James Royal, Ph.D. on Twitter](https://twitter.com/JimRoyalPhD) - [Connect with James Royal, Ph.D. on LinkedIn](https://www.linkedin.com/in/james-royal-phd-809b929/) - [Get in contact with James Royal, Ph.D. via Email](mailto:jroyal@redventures.com) [Read more from James](https://www.bankrate.com/authors/james-royal/) Former Bankrate principal writer and editor James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more. ![Office employees meet in a large room](https://www.bankrate.com/2021/08/15143351/What-is-a-401k.jpeg?auto=webp&optimize=high&crop=16:9) Morsa Images/Getty Images Bankrate is always editorially independent. While we adhere to strict editorial integrity , this post may contain references to products from our partners. Here's an explanation for how we make money . Our Bankrate promise is to ensure everything we publish is objective, accurate and trustworthy. Table of contents - [What is a 401(k) plan and how does it work?](https://www.bankrate.com/retirement/401k/#what-is) - [Getting started with a 401(k)](https://www.bankrate.com/retirement/401k/#getting-started) - [How much should you contribute to your 401(k)?](https://www.bankrate.com/retirement/401k/#contributions) - [Investing options for 401(k)s](https://www.bankrate.com/retirement/401k/#investments) - [How to choose investments for your 401(k)](https://www.bankrate.com/retirement/401k/#how-to-choose) - [Why should you invest in a 401(k)?](https://www.bankrate.com/retirement/401k/#why-invest) - [401(k) loans: What they are and how they work](https://www.bankrate.com/retirement/401k/#loans) - [401(k) FAQs](https://www.bankrate.com/retirement/401k/#faqs) Back to top ## Up next Part of Intro to 401(k) Plans ![How to set up your 401(k)](https://www.bankrate.com/2022/05/09093651/GettyImages-1394289064.jpg) [How to set up your 401(k)](https://www.bankrate.com/retirement/how-to-set-up-your-401k/?series=intro-to-401k-plans) Retirement By [Georgina Tzanetos](https://www.bankrate.com/authors/georgina-tzanetos/) 5 min read ![A group of colleague discuss over a computer](https://www.bankrate.com/2020/06/16171557/How-to-pick-investments-in-a-401k.jpeg) [401(k) investments to maximize your portfolio](https://www.bankrate.com/retirement/how-to-pick-401k-investments/?series=intro-to-401k-plans) Retirement By [James Royal, Ph.D.](https://www.bankrate.com/authors/james-royal/) 7 min read ![A woman laughs with colleagues at an office table](https://www.bankrate.com/2020/04/22191152/Untitled-11.jpeg) [Roth 401(k) vs. 401(k): Which one is better for you?](https://www.bankrate.com/retirement/traditional-401k-vs-roth-401k/?series=intro-to-401k-plans) Retirement By [James Royal, Ph.D.](https://www.bankrate.com/authors/james-royal/) 8 min read ![A woman works from a laptop at her office](https://www.bankrate.com/2021/07/28094107/What-happens-to-your-401k-after-you-leave-a-job.jpeg) [What happens to your 401(k) after you leave a job? 8 key things to consider](https://www.bankrate.com/retirement/8-tips-on-moving-401k-after-leaving-job/?series=intro-to-401k-plans) Retirement By [James Royal, Ph.D.](https://www.bankrate.com/authors/james-royal/) 9 min read ![A woman going over financial documents](https://www.bankrate.com/2024/02/14160152/Refresh_Best_401k_rollover_options.jpg) [Best places to roll over your 401(k) in 2025](https://www.bankrate.com/retirement/best-places-to-rollover-401k/?series=intro-to-401k-plans) Retirement By [James Royal, Ph.D.](https://www.bankrate.com/authors/james-royal/) 8 min read ## [Bankrate logo](https://www.bankrate.com/) ### About - [About us](https://www.bankrate.com/about/) - [Leadership](https://www.bankrate.com/leadership/) - [Press room](https://www.bankrate.com/press-releases/) - [Bankrate Data Center](https://www.bankrate.com/data-center/) - [Careers](https://www.bankrate.com/careers/) - [Site map](https://www.bankrate.com/corporate/site-map/) ### Help - [Compare rates](https://www.bankrate.com/compare-rates/) - [Latest news](https://www.bankrate.com/news/) - [Popular topics](https://www.bankrate.com/popular-finance-topics/) - [Advertise with us](https://www.bankrate.com/media-kit/) ### Legal - [Privacy policy](https://www.bankrate.com/privacy/) - Cookie settings - [Do Not Sell or Share My Personal Information](https://www.bankrate.com/do-not-sell-or-share-my-personal-information/) - [Consumer Health Information Privacy Policy](https://www.bankrate.com/consumer-health-information-privacy-policy/) - [Understanding Bankrate’s averages](https://www.bankrate.com/understanding-bankrates-rate-averages/) - [Terms of use](https://www.bankrate.com/terms/) - [GLBA annual notice](https://www.bankrate.com/glba-notice/) - [California Consumer Financial Privacy Notice](https://www.bankrate.com/2022/02/15094901/california-notice.pdf) - [Licenses](https://www.bankrate.com/licenses/) ### How we make money Bankrate.com is an independent, advertising-supported publisher and comparison service. Our websites may earn compensation when a customer clicks on a link, when an application is approved, or when an account is opened. Therefore, this compensation may impact what products appear and how, where, and in what order they appear within listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. Other factors, such as our proprietary website rules and whether a product is offered in your area or at your self-selected credit score range, can also impact how and where products appear on this site. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service. Bankrate, LLC NMLS ID\# 1427381 \\| [NMLS Consumer Access](http://www.nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/1427381) BR Tech Services, Inc. NMLS ID \#1743443 \\| [NMLS Consumer Access](http://www.nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/1743443) © 2026 Bankrate, LLC. A Red Ventures company. All Rights Reserved.
Readable Markdown	## Key takeaways - A 401(k) plan is a tax-advantaged way to invest for retirement, often with employer contributions. - You should at least contribute enough to get your employer’s full match — otherwise you’re leaving money on the table. - Investment options vary by plan, so you’ll need to evaluate costs, risk and asset mix. - Once you set up your 401(k), you’ll have money contributed automatically from your paychecks and invested in the funds you’ve selected. - Rules around loans, early withdrawals and required minimum distributions can result in hefty penalties and fees if you’re not paying attention. If you’re working and already saving for retirement or plan to start socking away money soon, investing in a 401(k) plan can help you build a sizable nest egg. If you’re thinking about signing up for a 401(k), or simply want to know more about how to take full advantage of this [type of retirement plan](https://www.bankrate.com/retirement/best-retirement-plans/), here’s everything you need to know. ## What is a 401(k) plan and how does it work? A 401(k) plan is a tax-advantaged retirement savings tool offered by employers that allows eligible employees to contribute a portion of their salary up to a set amount each year. Unlike traditional pension plans, in which the employer promises a specified monthly benefit at retirement, 401(k) plans are funded by contributions deducted directly from the employee’s paycheck. Many companies match contributions up to a certain percentage of your annual salary. ## Getting started with a 401(k) While 401(k) plans are broadly similar, each employer’s plan can differ in important ways, such as whether you can take a loan against your savings or the types of investments available. Here are some key things to understand about your plan as you get started: - What are your company’s eligibility requirements and will you automatically be enrolled in the plan? - Will the plan automatically increase your contribution each year? - Does your company offer a matching contribution and how much is it? - What investment options does the plan offer? What do they cost and are those funds expensive relative to other available options? - Does the plan offer any third-party advice (such as from the plan’s administrator) or any option to have the account managed for you? - Can you invest in individual securities or do you have to stick to the funds provided in the plan? - Can you take a loan against your account balance? How much does the loan cost? These are a few of the most important questions that you’ll want to answer as you get started with your 401(k). Don’t assume that all plans are alike, because your employer may change important aspects of the plan — even beyond the basics, such as its matching contribution. ## How much should you contribute to your 401(k)? When it comes to how much of your pay you should contribute, everyone has different financial needs in retirement, but there are some general rules you can follow. Contribute enough to take advantage of any matching dollars offered by your employer, says Catherine Golladay, former managing director at Charles Schwab. Whether your company match is dollar-for-dollar or something smaller, such as 50 cents on the dollar, don’t pass up the match. “Not doing so is like leaving money on the table,” she says. After saving enough to get the full employer match, Golladay suggests paying off high-interest debt and [building an emergency fund](https://www.bankrate.com/banking/savings/starting-an-emergency-fund/). Then, go back and maximize tax-advantaged retirement accounts, either the 401(k) or retirement accounts, such as an [individual retirement account (IRA) or Roth IRA](https://www.bankrate.com/investing/traditional-ira-vs-roth-ira/). About 70 million Americans invest in 401(k)s and these retirement plans hold \$8.9 trillion in assets, according to the [Investment Company Institute](https://www.ici.org/401k), citing data as of Sept. 30, 2024. Plan participants can roll up substantial savings over the years of their working lives. [Here’s how much the average American has in a 401(k) by age](https://www.bankrate.com/retirement/average-401k-balance-by-age/). ### Contribution limits for 401(k) plans In 2025, the IRS lets you contribute up to \$23,500 to your 401(k). If you’re age 50 or older, you can add a \$7,500 catch-up contribution. Employer matching doesn’t count toward this limit, so the total can be even higher. These limits typically go up every year to keep pace with inflation, so check annually to see if you can stash away more money. ### How employer matching works Employer matching is one of the biggest perks of a 401(k). If it’s offered at your job, your employer agrees to [match a portion of your contributions](https://www.bankrate.com/retirement/401k-match/). For example, they might match 100 percent of your contributions up to 4 percent of your salary. Some employers use a partial match — 50 percent of your contributions up to 6 percent of your salary, for example. But there’s a catch. You may need to stay with the company for a few years to fully “own” the match. [This is called vesting.](https://www.bankrate.com/retirement/what-it-means-to-be-vested/) Some employers vest you immediately, while others make you wait a year or longer. As Golladay notes, getting that company match is essentially free money. Always contribute at least enough to get the full match, even if you can’t max out your account. ## Investing options for 401(k)s Most 401(k) plans have at least three investment choices, though others offer many more options. The average plan offers about 28 investment options, according to the Investment Company Institute. The menu could include a mix of investments, such as mutual funds, company stock and index funds, as well as stable value funds (or cash), bond funds and so-called “target date” funds, which adjust your portfolio based on your years until retirement. Fortunately, while you can pick your own funds if you’re the do-it-yourself type, you often don’t have to decide how to invest completely on your own. “Many of today’s 401(k) plans include professional investment advice, which can be key in helping the participant make investment decisions based on their overall financial picture,” Golladay says. [Target-date funds](https://www.bankrate.com/retirement/target-date-funds-pros-and-cons/) (TDFs) have become popular options because they automatically adjust the mix of investments over time to align with investors’ risk tolerance as they approach retirement. For example, they move money from higher-risk stock funds to lower-risk bond funds as you near retirement, so that you have a more stable portfolio when you need the money. While target-date funds meet many investors’ demands, they don’t fit every individual’s needs. “While a TDF can be effective, a more tailored portfolio based on multiple data points about the investor may be the best option for some,” Golladay says. Here are [other ways that you can maximize your 401(k)](https://www.bankrate.com/retirement/401k-plan-smart-moves-to-make/) over time and generate higher returns. ## How to choose investments for your 401(k) Here are some smart moves to make with your 401(k), including how to earn a higher return by being aggressive with your investments and when not to: - Design your investments with your age in mind. [Avoid being too conservative](https://www.bankrate.com/retirement/signs-your-401k-portfolio-is-too-conservative/) when you’re younger and [too aggressive when you’re old](https://www.bankrate.com/retirement/signs-your-401k-portfolio-is-too-aggressive/). If you’re in your 20s or 30s, you can afford to be more aggressive with your investments — investing more or all of your money into potentially higher-returning stocks or stock funds — because you have more time to recover from any market slumps along the way. As you age, however, your asset allocation should shift to more conservative investments — bonds or bond funds — to help protect your portfolio from the volatility of stocks. - [Index funds](https://www.bankrate.com/investing/what-is-an-index-fund/), such as those based on the S\&P 500 index, are a good all-around pick for the stock portion of your portfolio. They’re a [top recommendation from legendary investor Warren Buffett](https://www.bankrate.com/investing/good-investment-advice-to-follow/). - Use any tools offered by your 401(k) provider. Many 401(k) plans offer tools (online calculators, worksheets) for determining risk tolerance and suitable investment options. - If you’re not comfortable selecting funds or building an investment portfolio on your own, the best tool may be a competent [financial advisor](https://www.bankrate.com/investing/financial-advisors/financial-advisor-matching/?utm_source=BRarticle). Select an advisor who can design a long-term plan for you and help you stick to it — [here’s how to find one](https://www.bankrate.com/investing/financial-advisors/how-to-choose-a-financial-advisor/). - Time is your most important ally when investing for retirement. It’s less important to find the very best investment than it is to find a good investment and then buy and hold it for years, if not decades. Before you can decide how to allocate your contributions, determine your risk tolerance. It’s critical to know how well you can deal with volatility in your portfolio. You want to make sure you can sleep at night if financial markets turn turbulent and asset prices fall. But keep in mind that markets historically have recovered even after [brutal bear markets](https://www.bankrate.com/investing/what-is-a-bear-market/), or stock market declines of 20 percent or more, which are typical during recessions. Bankrate’s [401(K) calculator](https://www.bankrate.com/retirement/401-k-calculator/) can help you estimate your savings over time. ## Why should you invest in a 401(k)? A 401(k) is an excellent investment option, and everyone should consider opening an account if they’re able to. Not all employers offer a 401(k) retirement plan, but if yours does, it’s a smart move to participate in one for the following reasons: Tax advantages A 401(k) lets you invest on a pre-tax basis, meaning you can take a tax break on this year’s taxes. You’ll be able to grow your assets tax-deferred until you withdraw them at retirement, when you’ll owe tax at ordinary income rates. A [Roth 401(k)](https://www.bankrate.com/retirement/roth-401k/) also offers tax benefits, but you’ll contribute money on an after-tax basis and enjoy tax-free withdrawals in retirement. Matching contributions Many employers offer free matching money if you contribute to your plan. You may be able to rake in an extra 3 or 4 percent of your salary this way, and it’s a risk-free return, though some plans require a few years for the match to vest. Automatic investments Once you set up your 401(k) investment plan, you’ll have money contributed automatically from your paychecks and invested in the funds you’ve selected. Attractive investments Many 401(k) plans offer historically high-return investments such as stocks or stock funds, so you’re likely to earn much more than you could in a traditional bank account over time. Still, some investors are worried about investing in stocks because of their riskiness. “All investments come with risk, but the fear of losing money should not inhibit someone from utilizing a 401(k),” Golladay says. While markets go up and go down, history has shown that over the long run, they move up. As measured by the [S\&P 500 index](https://www.bankrate.com/investing/what-is-sp-500/), over time stocks returned around 10 percent annually. The S\&P 500 comprises hundreds of America’s largest publicly traded companies. That’s why investors, especially the risk-averse, should take a long-term approach to their retirement investments. “In times of market volatility or uncertainty, it’s important to remember that panic isn’t a strategy, especially with an investment as long-term in nature as a 401(k),” Golladay says. ## 401(k) loans: What they are and how they work If you need cash for an emergency or to pay down debt, your 401(k) plan may allow you to take out a loan and borrow up to 50 percent of your vested balance, but not more than \$50,000. In most cases, you have to repay the money with interest within five years. While the interest payments go into your account — which means you are paying yourself back rather than giving your money to a bank — there are significant downsides. When you make a 401(k) withdrawal, that money is no longer invested in the market, and therefore, you could miss out on gains if asset prices continue to rise. Also, the original contributions to the account were made with pre-tax dollars, but the loan payments will be made with after-tax dollars. So, you’re losing a key tax benefit here. If you leave your employer, you’ll also have to repay your loan faster, generally when taxes are due for the current tax year. Try to avoid taking a [401(k) loan](https://www.bankrate.com/retirement/borrow-from-401k-loan/) if at all possible, though it may be better than taking an early withdrawal. ## 401(k) FAQs — Bankrate’s [Rachel Christian](https://www.bankrate.com/authors/rachel-christian/) contributed to an update. Did you find this page helpful? Help us improve our content
Shard	148 (laksa)
Root Hash	16841441868536461148
Unparsed URL	com,bankrate!www,/retirement/401k/ s443