Let’s play the “What’s Wrong With This Picture?” game.

The picture provides a new view of 401(k) plans administered by The Vanguard Group – how employers set them up and how employees use them. There’s a bit of good news, but lots of bad.

Vanguard released a study last week looking at 1,800 plans with 2.8 million participants, who have holdings worth $400 billion. Let’s look at each finding and see what it means:

¢ Eligibility. Nearly half the plans allow employees to start making contributions as soon as they are hired, which is good.

But why not the other half? Most likely because employers don’t want the hassle and expense of overseeing accounts started by people who leave quickly. But the delay is costly for workers who do stay and start a 401(k).

If you contributed, say, $5,000 in your first year on the job, it could grow to more than $23,000 after 20 years, assuming an 8 percent annual return. It would be worth more than $108,000 after 40 years.

Dollar for dollar, the first year’s contribution is the most valuable you’ll ever make, since it will have the longest to compound. Miss the first year on a new job, and that money is gone forever.

¢ Low employee participation rates. About a third of eligible employees don’t put anything into their plans. Among those who do, the average contribution is just 7.3 percent of pay, though many plans allow as much as 20 percent. Only a quarter of employees contributed 10 percent or more.

The median account balance – with half having more and half less – was just $24,000, and a third of employees had $10,000 or less.

Granted, some people can’t afford to put in more than they do. Still, many could do better. If you’re saving for retirement, the 401(k) should be your first choice among investing options because the tax deduction on contributions and tax deferral in investing gains can supercharge compounding.

¢ Investment choices. The average employee had 70 percent of his or her holdings in stocks. That’s good. Bonds and money market funds will not grow fast enough to provide for a comfortable retirement, and they should be emphasized only after you’re already retired. Just 12 percent of plans offered the employer’s stock as an investing option. That’s good, since having both your job and your retirement funds tied up in one company is too risky.

Unfortunately, since it is large plans that tend to offer employer stock, 43 percent of the employees in Vanguard plans had access to company stock, and 42 percent of those employees had more than 20 percent of their holdings in their employer’s stock. That’s too many eggs in one basket. I’d keep it to 10 percent or less – and that only if I thought it was a world-beater stock.

¢ Employer contributions. About 91 percent of all plans include contributions from employers on top of those by employees. That’s very good news, especially as fewer and fewer companies offer traditional pension plans.

Unfortunately, the most common employer contribution was capped at 3 percent of the employee’s pay. Good employers put in twice as much.

If your boss is one of the stingy ones, lobby for more or think about changing jobs. In the meantime, put in more money yourself if you can.

¢ Employee decisions. Generally, this news was good.

Only a modest 19 percent of employees moved money from one holding to another during the year studied. This is good – Employees aren’t using 401(k)s to day-trade. Changes should be made to maintain the desired balance between different types of holdings, not in a self-defeating rush to chase after the latest hot investment.

Looking at all the investment changes as a group, Vanguard found that employees did not appear to be chasing fads. As some investors moved money out of stock funds, others moved similar sums in, for instance.

In another area of potential hazards, employees did not seem to be using their 401(k)s for easy credit. Employees who had taken loans from their 401(k)s had, on average, borrowed just 13 percent of their accounts’ values – a pretty modest sum.

Loans are bad. Although you have to pay the money back, with interest, you miss potential investment gains in the meantime.