Establishing a 401K through an employer is often the first step an individual will take when investing in their retirement. Because contributions are automatically deducted from paychecks before being taxed, this retirement plan option can easily be ineffective if you aren't monitoring its growth or contributing enough. However, there are many benefits that come with taking advantage of your employer's 401K plan.

Unlike other retirement planning options, 401Ks are only available through a sponsoring employer and employees are responsible for deciding whether or not they want to participate or contribute. As a qualified retirement plan, a 401K lets a company's eligible employees save for and invest in their retirement while maintaining a tax-deferred status. In many cases, employers will match their employee's contributions to a 401K plan, even though they aren't required to