The 401k retirement plan has taken the corporate world by storm since 1979, primarily because of it’s affordability to employers. While pensions often sucked companies dry, 401k providers charge a small monthly administration fee (usually around $100) and this will give employers and employees many different investment options.

After signing a contract, you allow a percentage of your income to be deducted and put into a special account where it can vest interest over the years and profit with the economy. Sometimes employers agree to match your contributions and your final pay-out could be doubled by the time you receive it.

What makes the 401k retirement plan different from other pensions is its flexibility and the amount of control you have over it. Some choices include: What percentage or flat monthly rate do you want to contribute? Also, where do you want to invest?

Your employer will provide you with a list and you can choose between stocks, mutual funds, bonds, money market investments, company stock or any combination of the aforementioned. You may also select a financial adviser to make the choice for you.

As with anything in life, there are risks. If your company goes bankrupt, you may lose a huge portion of your savings, especially if you’ve invested heavily in company stocks.

You may decide to take a more active role in where your money gets invested because some annuities may be losers, while others are winners. Generally, it’s recommended to diversify where your money goes so you don’t “put all your eggs into one basket.”

Check with your employer to see which 401k retirement plan you’re under. Either defined benefit or defined contribution. Under a defined benefit plan, your employer has control over the final pay-outs, which do not fluctuate as the market does, but instead are based upon your salary history and years employed.

With a defined contribution plan, you’ll have more control over how much you put in and where it’s invested, but less guarantee on how much you get back.

When you leave a company, generally your 401k retirement plan remains active for the rest of your life. If you feel uncomfortable leaving your savings in the care of your ex-employer, or if your company charges a fee for leaving your account with them, you may rollover 401 k benefits into an Individual Retirement Account.

Look into the rollover 401 k if you’re changing employers too. You’re allowed to draw on your 401k retirement plan after age 59 1/2 and you will then pay taxes on what you take out.

Most plans have a minimum distribution requirement you must abide by, meaning that once you reach age 70 1/2, you’ll have to start to withdraw some of your money, unless of course, you’re still working.

The only plan that is exempt from the minimum distribution rules is the Roth IRA. You may decide to take a crash course in investing and take a more active role to ensure maximum returns.

The 401k retirement plan will be the baseboard for your savings. Be sure to contribute the maximum amount to get the maximum returns.

While there are no guarantees, if your employer agrees to match your contributions, this is at least free money. To ensure that your money outlives you, meet with financial advisers to develop a supplemental retirement plan.

Browse to Mike Selvon portal at http://retirementplanning.mininicherecommends.com/ to find out more about the 401k retirement plan. We greatly appreciate your feedback at our retirement planning blog at http://www.mynicheportal.com/financial-services/.