As someone who writes about retirement planning a lot, I'm often asked whether it pays to take advantage of a 401(k) plan if there's one available. And generally, my answer is a resounding "yes."

One of the best things about 401(k)s is that they allow you to sock away much more money on an annual basis than IRAs. Currently, 401(k)s max out at $19,500 a year for savers under 50, and $26,000 for those 50 and over. By contrast, IRAs max out at $6,000 and $7,000, respectively.

Not only do these higher contribution limits allow you to save more for the future, but they can also land you a larger tax break immediately. Traditional 401(k) contributions go in tax-free, allowing you to shield some present-day income from the IRS.

Pen resting on 401(k) plan statement

Image source: Getty Images.

But while I generally like to encourage people to sign up for their employers' 401(k) plans, that's not always the best move. In fact, if these three factors apply to you, it may be time to dump your company's retirement plan and look at other options instead.

1. No match

Many employers that sponsor 401(k) plans also match worker contributions to some degree. Now these matches can vary, and some are more generous than others. But if your company offers no such match whatsoever, then frankly, that takes a lot of the appeal of 401(k)s out of the equation.

Now that said, some companies have temporarily put matching on hold due to the impact of the pandemic. If that's the case with your employer but you expect your match to come back later this year or at some point in 2022, you don't need to run from that plan. But if you've never been offered a match and your employer has no plans to change that, then you may want to look at saving elsewhere.

2. High fees

401(k) plans are notorious for charging high fees that can eat away at your returns. These fees typically consist of administrative fees, which you can't control, and investment fees, which you can control to some degree, but sometimes not, which we'll discuss in just a minute. If the administrative fees you're charged exceed the 1% threshold, then you may want to ditch your employer plan and open an account that won't charge you so much off the bat.

3. Limited fund choices

Most 401(k) plans offer at least a dozen different funds for you to invest your money in. But some plans offer a smaller selection, or a selection that's not very diverse. And that could leave you not only unhappy with your investments, but also, with higher fees than you'd like to be paying.

Generally, in a 401(k), you can choose between different actively managed mutual funds and index funds. The fees you'll pay for index funds, which are passively managed, tend to be substantially lower than what actively managed mutual funds will charge you. But if you're not offered many index funds in your 401(k), then you may want to look at housing your savings elsewhere.

Other options for your retirement savings

One thing that's universal to 401(k)s is that you generally cannot buy individual stocks -- you're limited to different funds only. IRAs, on the other hand, do let you hand-pick stocks, which may be a more efficient and cost-effective means of growing wealth.

You can also save for retirement in a traditional brokerage account -- one that doesn't offer tax benefits like a 401(k) or IRA. This solution isn't ideal, because those tax breaks can really add up, but it's worth looking at in conjunction with maxing out an IRA if your employer's 401(k) isn't working for you.

For example, say you're 45 and are able to set aside $12,000 a year for retirement. If you're not happy with your 401(k), you could max out an IRA at $6,000 and then put another $6,000 into a regular brokerage account and leave that money untouched until you're ready to leave the workforce.

While it may be nice to have the option to save for retirement in a 401(k), that's not always your best choice. Don't hesitate to put your money elsewhere if the 401(k) your company offers isn't a great plan at all.