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For a few years, I helped investors with their retirement savings and no matter what industry the client worked in most of them didn't understand how their retirement plan works.  

There were a few terms that I was always asked to explain so I want to make sure you understand them too.  

Automatically enrolled - As a courtesy, some employers automatically enroll you into their retirement plan once you start working or once your benefits start.  When you are automatically enrolled in a retirement plan it cannot be more than 10% of your salary (most employers that I have seen are conservative and are between 1% and 3%.  The contributions are typically invested in a money market fund or a Lifecycle Life-Cycle Fund.  Investopedia defines Life-cycle funds as a type of asset-allocation mutual fund in which the proportional representation of an asset class in a fund's portfolio is automatically adjusted during the course of the fund's time horizon.  If you are automatically enrolled in your retirement plan it's important to contact your benefits office or the company where your plan is held to make investment selections.

Investment Options - Investment options are actually the mutual funds, stocks, and bonds that are available for you to invest in your plan.  The most common options are  Money Market Accounts, CDs, US Treasury Bills (Notes & Bonds), Mutual Funds, Annuities, Bonds & Stocks.  Your employer chooses the fund options available in your plan.  

Vesting -  The amount of time you must work for a company before you are able to keep the contributions your employer made to your retirement account.   For Qualified Defined Contribution plans (for example 401(k), 403(b), 457) 

There are currently three types of vesting options: immediate, cliff and graduated.

Immediate is self-explanatory.

If your employer uses the cliff option, you will be able to keep all of your employer's contributions once you reach 3 years of service.

If your employer uses the graduated option, each year you work for your employer you get to keep 20% of the contributions your employer made to your retirement plan.  See an example of the vesting schedule below:

1 year of service - 0% vested 

2 years of service - 20% vested

3 years of service - 40% vested 

4 years of service - 60%vested

5 years of service - 80% vested

6 years of service - 100% vested

So if you leave your job after 2 years you get to keep 20% of your employers contributions to the plan. The rest of your employer's contributions will be returned back to your employer.

Simple & SEP IRAs contributions are always 100% vested.

Plan Rules - Each retirement plan has predefined rules that are set by the employer (benefits department) based on the options offered by the investment company that holds the plan.   It's important to understand your plan rules because they will help you make informed decisions when it comes to your investment options, retirement loans, rolling over or transferring your money and retirement income.  If you have questions about your plan rules contact your benefits department or the investment company that holds your account.

Loan Availability - Retirement plans have the option to offer loans to the participants in the plan but are not required to.  You must meet certain criteria to take a loan and the maximum loan amount you may borrow against your vested balance is 50% or $50,000 whichever is less.  All loans must be paid within 5 years (minimum of quarterly payments) unless you are using the loan to purchase your primary residence.  If you fail to pay back the loan according to the terms it will be treated as a withdrawal from your retirement plan.

Retirement Payout Options -  You may have a while to go, so you don't have to know every detail about your payout options right now, but this is something you should think about.  It's a personal decision based on how much income you need, how much you already have saved, how much you will receive from social security, if anything, etc. 

Contributions - Money put into a retirement plan either by you are your employer.  Depending on the type of retirement plan you have, contributions can be pretax or after tax.  As an additional benefit, your employer may offer matching contribution up to a certain amount, like 3% so if you contribute 3% to your retirement plan, your employer will also contribute 3 percent.

If you have any terms you have questions about or if you want me to expand more on a specific term, let me know in the comments below.