Select low-cost funds

Each and every fund in your 401(k) plan will charge a variety of fees. No matter how your investments perform, the 401(k) fees are automatically deducted from your returns. Your plan sponsor is obliged to send you a 401(k) fee disclosure statement, that will list how much each fund you have in your 401(k) plan will cost.

You can also find out if your 401(k) plan is able to provide you with a lower-cost fund that can meet your investment needs. Selecting low-cost funds might help your retirement savings compound faster.

Avoid penalties

Make sure you pay attention to your age when you decide on the date you’ll start withdrawing your 401(k). There are some penalties that might apply if you take money out of your 401(k) account way too soon or too late. You’ll usually be charged a 10% early withdrawal penalty if you decide to initiate a 401(k) distribution before you reach 55.

There is also a 50% penalty if you can’t take the needed minimum distribution from your 401(k) plan, and pay the income tax bill, each year after you reach 72 years old. So make sure you avoid tax penalties when you take distributions from your retirement account.