How to sign up. Two very important questions you need to answer.

Deciding to participate in your company 401(k), one of the smartest investments you can make for your future. Here’s how the enrollment process works in general.

There are two questions you think about when signing up.

1. How much should I contribute
2. Where to invest my savings

How much should I contribute?

When you enroll, you will need to decide what percentage of your paycheck will be placed in your 401(k) account each pay period.

• In general, you should contribute as much as you possibly can—think of it as paying your nest egg first, then budgeting to work with the money that remains. Most people save between 6-7% of their pay. Some experts advise the number should be closer to 12-15%.
• If your employer matches your contributions, you should always contribute at least enough to qualify for the maximum matching contribution.

Where should I invest my money?

You will need to decide where your 401(k) contributions will be invested.

• Your employer’s plan will offer a menu of investment choices, typically mutual funds. Some types of funds are riskier than others. The mix of investments you choose will depend largely on how many years you have until retirement. Keep in mind that you can always change your investments later.
• Be aware of fees. Fees that you are paying will be deducted from your 401(k) on a regular basis, reducing the growth of your money. Look in your summary plan description for the administration fees charged by your plan provider. You should also find out the fees associated with the mutual funds you are interested in investing in; there should be a link to each fund prospectus from your 401(k) website. If you’re not sure about fees you will be paying, ask your employer.

More and more companies are automatically enrolling new employees in their 401(k) plan. In this case, your contribution level and investments will be pre-set by the plan.

• You should look at the default rate, or what you are automatically contributing. Most plans start off at a low contribution rate only 3%, this level of savings is sub-optimal. Most people save between 6-7% of their pay. Some experts advise the number should be closer to 12-15%.
• You should also look at the investment you have been automatically put into. Look at the fees, and they type of investment. You can change which investment has been selected for you. It is your savings, you control where the money goes.