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Changing your company's 401(k) plan

Two years ago, "Stephen" felt that his company's 401(k) plan was "dismal."

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The worker -- who prefers to remain anonymous to protect his employer's identity -- was unhappy with many aspects of his plan.

"(It) offered problematic fund choices and an inscrutable cost structure," Stephen says.

At first, Stephen didn't mention his concerns to anyone. But eventually he raised the issue to his company's human resources director when asked for input on another issue.

Stephen gave some suggestions for improvement, such as offering a few more fund choices and finding lower-cost investments.

To Stephen's surprise, the human resources director asked him to join the company's 401(k) committee to evaluate the current plan and look at alternatives. Stephen accepted.

"We evaluated five different providers," he says, before choosing a new company to administer the employer's plan.

If you work for a company that provides a 401(k) plan, consider yourself lucky. You have access to a tax-advantaged retirement account that can help you build a substantial nest egg for the future.

However, there are things you can do if you don't like the choices in your 401(k).

Under the laws of the Employee Retirement Income Security Act of 1974, or ERISA, 401(k) plan sponsors must meet minimum conduct standards when it comes to handling employees' money.

This includes working in the interest of the plan participants (and their beneficiaries) and offering diversified investment choices.

"The plan sponsor has a fiduciary duty to make sure there are alternatives for employees," says Gil Mateer, president of the Retirement Services Group at Bryn Mawr Trust Company in Bryn Mawr, Pa.

Beyond their fiduciary duties, private sector plan sponsors have a lot of choices available to them when it comes to actually deciding which investments will go into the plan.

Here are some actions you can take if you don't like your 401(k) choices:

401(k) fix
Here are four actions you can take if you don't like the options offered by your workplace 401(k) plan.
4 actions if your 401(k) is flawed
1. Learn about your options
2. Get support from co-workers
3. Offer to help the plan administrator
4. If all else fails, invest elsewhere

Learn about your options
First, educate yourself about your company plan. Know what it offers, and how the benefits compare to other 401(k) plans at other companies.

If you don't have a lot of experience with investing, it can be difficult to make choices about your own 401(k) -- let alone figuring out if the entire company plan needs an overhaul. But it can be done.

Read a few articles and books about investments. Then, start talking to other people -- inside and outside of your company -- who have 401(k) plans. Find out what they like and dislike about their benefits.

Your company isn't required to offer every investment feature that's out there, but there are some options that are more attractive than others.

Get support from co-workers
Once you have identified ways to improve the company 401(k) plan, find fellow colleagues who have the same concerns.

No one wants to be known as the lone chronic complainer at their job, so make sure your co-workers are involved and support your efforts.

"Talk to some of your fellow employees and say, 'Gee, have you ever looked at this plan and seen how much we're paying out in fees?'" suggests Tony Schuman, managing director of Corporate Financial Advisors in Dallas. "This is really critical, because it can affect your life for years."

If you aren't able to save enough money, you might not be able to retire when you'd like. Any problem with the plan that isn't addressed now could depress everyone's individual portfolios in the future.

Next: "It's not something that should be done lightly."
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