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With few exceptions, the 401(k) has become the de-facto retirement plan for most American workers. All 401(k) contributors get a handful of "guaranteed" benefits, including:

  • Payroll contributions of up to $18,000 per year (with regular increases to match inflation). 
  • Workers age 50 and older can contribute an extra $6,000 in "catch-up" funds in 2015. 
  • Contributions are pre-tax, meaning you'll save in taxes each year you contribute. 
  • Your contributions grow completely tax free until distribution in retirement.

These are locked-in parts of the 401(k) that are set by federal law. If your employer offers a 401(k), you get these benefits. However, your employer has control over many parts of its program, including how much it matches, the investment options in your plan, and even how long you have to stay with the company before employer matching contributions become guaranteed. 

We asked three of our top experts, "What's a sign of a lousy 401(k)?" Here's what they told us to look for:

Dan Caplinger: Perhaps the clearest sign of a bad 401(k) is a plan that has limited investment options, all of which charge expensive fees. Mutual funds are by far the most popular investment choices available on most companies' 401(k) menus, and fortunately it's highly unusual to find funds that charge up-front sales loads to their retirement-plan customers. Apart from that egregious fee, though, you'll find plenty of 401(k)-held funds that take advantage of workers.

The problem stems from the fact that expensive fund providers know employers don't want to pay more than necessary to give their employees the fringe benefit of a retirement plan. As a result, some fund companies offer low-cost or no-cost 401(k) plan services to employers, with the implicit understanding that the plan-servicing company's funds will get a prominent role in the investment menu for workers. In effect, employers shift their own administrative costs onto their employees, and your investment returns suffer in the long run.

A 401(k) plan with absolutely no low-cost investment options is a poor retirement plan. Absent other considerations such as employer matching, you might be better off not participating in an outrageously expensive 401(k) plan and instead choosing your own low-cost investments in an IRA.

Selena Maranjian: One indicator that your employer is not providing you with a great 401(k) plan is if there's little or nothing in the way of a matching contribution. One of the great features of 401(k)s, after all, is that they typically feature some kind of employer match.

According to the folks at, the average contribution that companies make to their workers' 401(k) accounts is 2.7% of their salaries. The amount is typically established via a formula, with the most typical being 50% of employee contributions, up to 6% of pay. Another possibility is a match of 100% of contributions, up to 3% of pay. Thus, if you earn $50,000 each year and you contribute 6% of your salary, which is $3,000, your employer might kick in an additional $1,500. It's not a mint, but it's free, guaranteed money, so we should all aim to contribute at least enough to our 401(k)s to grab all the matching dollars available.

Unfortunately, many people are not doing that. They're leaving money on the table instead, forfeiting a lot. A study by Financial Engines recently found that about one in four workers didn't max out their match, which in 2014 amounted to an average of $1,336 lost per worker. Over 20 years, that's nearly $43,000 lost, and altogether represents $24 billion lost per year. Ouch.

If your 401(k) offers no match, or a paltry one, consider letting your HR department know you're disappointed. It's a powerful tool in wealth building. A Fidelity review of people with at least $1 million in their 401(k)s found that their average company match was 5%, well above average. No matter your company's match, take it upon yourself to save aggressively for your retirement -- in your 401(k), in a traditional or Roth IRA, and/or elsewhere.

Jason Hall: Selena and Dan point out the two most important things that make a 401(k) great, lousy, or somewhere in between. Another sign that your employer's plan might not be up to snuff is the vesting period for employer matching funds.

In simple terms, the vesting period is how long (if at all) employees are required to stay with the employer before those matching contributions are actually their money. I've seen companies with schedules that can take as long as five years to fully vest in the matching funds.

While it makes sense that a company would want to protect its investment in a new employee, an onerous vesting period is simply a cost-cutting measure that punishes employees who leave.

If you're planning to leave your job, make sure you understand the vesting requirements. If you're going to lose some of your employer's matching funds, it's worth trying to negotiate with your new employer to see if it will make you whole.