Limited Fund Options
In addition to having limited asset classes to invest in, many 401(k) plans also limit the investment choices you have within those asset classes. For example, your 401(k) might offer large-cap, small-cap and foreign-stock buckets, but only one mutual fund option for each.
If you want exposure to that asset class you’ll be forced to choose the available fund — even if it has high expenses and low performance. This is one of the major weaknesses of 401(k) plans in general. While they encourage retirement savings — which is a definite plus — you have practically no investment freedom.
