Are you like many people who work for a large company? Do you have a better idea of how many vacation days you are entitled to than what type of retirement plan your employer offers?

A surprisingly large number of American workers do not take full advantage of the 401(k) retirement plans offered by their employers. As many as 12 million Americans do not participate in their company's plan, at all, or fail to invest enough to take full advantage of free matching contributions, offered by their employers. These workers may be turning their backs on as much as $6 billion in retirement savings each year.

A 401(k) plan is like a mixture of an IRA with an employer-sponsored retirement plan. Your employer creates and administers the 401(k) plan and often contributes to it or matches part or all of what you put aside. You can deposit a tax-deferred portion of your salary into the plan where it can accumulate tax-free investment income until you retire.

When new employees are required to wait to enroll in a 401(k) plan, they are less likely to sign up than are new employees who are able to enroll immediately. Only 53% of employees with waiting periods eventually enroll in their company's retirement plan, compared to 70% of those who are not required to wait before signing up. The companies that have the highest level of employee participation require workers to state in writing that they wish to decline to enroll in the retirement plan.

Companies that provide a matching contribution have the highest level of participation, not surprisingly. And when employees are provided with easy access to loans, they are even more likely to join their employer's 401(k) plan. About 75% of plans allow loans, usually enabling workers to borrow up to half of their savings balance.

Unlike an IRA account, you do not have unlimited choices in which to invest your 401(k) funds. You must choose among the options offered by your employer. Some 401(k) plans only give you one investment choice. Others give you several choices and will even let you split your account among two or more different types of investments, usually different types of mutual funds.

Participating in your employer's 401(k) plan has the advantage of lowering your current tax burden since your contribution is deducted from your paycheck before you pay taxes on the money. Then between now and your retirement, the investment income and growth can continue to accumulate tax-free until you begin making withdrawals. You can actually leave the money to build up until you are about 70 - at which time the IRS requires you to begin making withdrawals.

It goes without saying that you should contribute as much as possible to retirement funds, because if you do not start saving aggressively for retirement, you may find yourself living a very different lifestyle from the one you are experiencing now.