401(k) Secrets: What Most People Don’t Know About In-Service Withdrawals
Most people think they're locked into their 401(k) plan until they retire or leave their job. But if you're 59½ or older, you might have a powerful option...
Your 401(k) could be one of the most powerful tools you have for building wealth — but only if you use it the right way.
Most people simply set their contributions once and forget about it. Smart retirees and wealth builders know a few small moves can make a huge difference over time. With the 2026 401(k) contribution limit set at $24,000 ($32,000 for those 50 and older), there's significant opportunity to accelerate your retirement savings if you know the right strategies.
Here are five quick 401(k) tips that most people miss — but you don't have to.
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1. Increase Your Contributions Automatically
Many 401(k) plans let you set up automatic annual increases. Even boosting your contribution by just 1% each year can lead to a significantly bigger retirement balance — without feeling the pinch.
For example, if you're currently contributing 6% of a $75,000 salary ($4,500 annually), increasing to 7% next year adds just $750 more — about $62 per month. But that extra 1% could compound to tens of thousands of additional dollars over a 20-year period.
The beauty of automatic escalation is that it typically coincides with annual raises, so you may not even notice the difference in your take-home pay. Some plans automatically cap increases once you reach the IRS maximum of $24,000 for 2026, ensuring you never over-contribute.
If your plan allows it, set up an automatic increase today and let your savings quietly snowball.
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2. Max Out the Employer Match (At Minimum)
Not contributing enough to get your full employer match is like refusing free money. Always contribute at least enough to capture every dollar your employer is willing to give you.
A typical employer match might be 50% of your contributions up to 6% of your salary. On that $75,000 salary, contributing the full 6% ($4,500) would earn you an additional $2,250 from your employer — that's an immediate 50% return on your investment.
For families planning retirement, this employer match represents one of the few guaranteed returns available in today's market. The employer match is one of the biggest advantages a 401(k) offers — and it's pure upside.
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3. Don't Ignore Your Investment Options
Default investment choices might not be right for your goals. Take time to review your plan's options carefully.
Many plans default new participants into target-date funds, which automatically adjust your asset allocation as you approach retirement. While these can be suitable for some investors, they may be too conservative for younger workers or too aggressive for pre-retirees in California, Texas, Florida, and other states where housing costs require more conservative planning approaches.
You want a mix of investments that matches your age, risk tolerance, and retirement timeline — not a one-size-fits-all solution. Many people leave thousands (or more) on the table by sticking with outdated investment allocations. Consider reviewing your allocation at least annually, especially as you approach major life changes or retirement milestones.
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4. Watch the Fees
Some 401(k) plans include expensive mutual funds or hidden administrative fees. High fees can quietly eat away at your returns over time.
Investment fees typically range from 0.05% for low-cost index funds to 1.5% or more for actively managed funds. On a $200,000 401(k) balance, the difference between a 0.5% fee and a 1.0% fee amounts to $1,000 annually — money that could otherwise compound in your account.
Look for low-cost index funds or ETFs when possible. Even shaving 0.50% off your investment costs could mean tens of thousands of extra dollars in retirement. Many modern plans offer institutional-class funds with expense ratios below 0.10%, providing broad market exposure at minimal cost.
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5. Consider an In-Service Rollover at 59½
If you're 59½ or older, you might be able to roll part of your 401(k) into an IRA while still working — without penalties or taxes. An in-service rollover gives you access to a wider range of investments, often at lower costs.
With IRAs offering virtually unlimited investment options compared to the typical 20-40 choices in employer plans, you gain access to individual stocks, bonds, REITs, and specialty funds. The 2026 IRA contribution limit is $7,500 ($8,000 for those 60-63, $15,500 for 64 and older), so you can continue contributing to both accounts simultaneously.
This strategy isn't right for everyone, but for many, it unlocks much greater flexibility and control over retirement planning.
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Your 401(k) doesn't exist in isolation. It needs to work alongside Social Security (with a 2.5% COLA increase for 2026), IRAs, taxable investments, and other income sources. For example, if you expect to be in a lower tax bracket in retirement, maximizing traditional 401(k) contributions makes sense. But if you anticipate higher taxes later — perhaps due to required minimum distributions or inheritance — Roth contributions might be more valuable.
Consider how your 401(k) fits into tax diversification, estate planning (especially with the federal estate tax exemption at $13.99 million for 2026), and healthcare costs (Medicare Part B premiums are $194.50/month in 2026).
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Bottom Line
Your 401(k) isn't just a savings account — it's a wealth-building machine if used properly. Small changes today could mean massive benefits later.
Start by reviewing your contributions, maximizing your employer match, cutting fees, and building a smarter investment strategy. These moves become even more critical as you approach retirement age and have less time to recover from mistakes.
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