Limited Fund Options

Apart from not having many choices in terms of asset classes to invest in, you also don’t have that many investment choices within those asset classes. For instance, you might be able to invest in large-cap, small-cap and foreign-stocks but you’ll only have one mutual fund option for each. If you want access to a certain asset class, you’ll have to go with the only available fund, regardless of its high costs and low performance. This is the biggest drawback of 401(k) plans; retirement savings are promoted and encouraged but the liberty to invest as you please is taken away from you.