What to Do About a Lousy 401(k) Plan

There's more to the 401(k) business than you may think. According to CNNMoney's "The Mole," administering a 401(k) plan is expensive, what with record keeping and compliance costs. As a result, some administrators offer low-cost plans to employers that are loaded with expensive mutual fund options. If this is the case at your job, the Mole suggests approaching your employer about changing 401(k) providers and otherwise opening an IRA (after you take advantage of any matching funds offered by your employer).

But how do you know if your 401(k) is subpar? Jeremy at GenerationXFinance, who works as a retirement planning specialist, provides a couple of red flags to help you determine if you're in a lousy plan:

• Annuities. They offer tax-deferred growth, which your retirement plan already does. Plus, annuities are known for their steep fees. If you're investing in a fund wrapped inside an annuity, he says, "you'll still be paying those fund's expenses. But on top of that, the annuity also has a fee, sometimes 1 percent to 2 percent, or more."

• Your company doesn't provide matching contributions. "Chances are you can find better investment alternatives with fewer restrictions by investing in an IRA," he says.

What if your plan is full of high-cost funds but your employer offers a match? It's a good idea to work out the match before jumping into an IRA, he says.