How to tell if your 401(k) is good (and what to do if it isn't)

By Gary Harka Jr · Updated October 28, 2026 · 6 min read

Not investment advice. This guide is general education about U.S. rules, written by an individual investor, not a financial adviser, tax professional, or attorney. Rules change and your situation is unique, so confirm details with your plan administrator, the IRS or DOL pages linked below, or a qualified professional before you act.

Most people never compare their 401(k) to anything. They sign up, pick a fund, and hope for the best. But plans differ a lot. Some employers put in thousands of dollars per worker each year and others put in nothing. Some plans are cheap and some quietly charge high fees. Here's how to judge yours in about 20 minutes, and what to do if it comes up short.

The five things that make a 401(k) good

1. How much the employer puts in

Employer money is usually the biggest difference between plans. It comes as a match (for example, the company adds 50 cents for every dollar you save, up to a percentage of pay) or as a non-elective or profit-sharing contribution paid whether or not you save. Your plan's Summary Plan Description (SPD) spells out the exact formula. HR must give you one, and it's often on the benefits website.

That's also why employer generosity is worth up to 50 of the 100 points in a 401kGrade score. We can't see the formula in public filings, but we can see the total dollars the employer contributed per active participant and compare that with plans in the same industry and of the same size. Here's exactly how that works.

2. How fast you own the employer's money (vesting)

Your own contributions are always 100% yours. Employer contributions can follow a vesting schedule. The IRS describes the common outer limits: "cliff" vesting where you own nothing until you're 100% vested after 3 years of service, or "graded" vesting that rises each year until you're fully vested after 6 years. Immediate vesting is best. If you might change jobs soon, a long schedule makes a generous match worth less to you.

3. What it costs

You pay two layers of cost: plan administration fees (recordkeeping, legal, audit, advice) and the expense ratio of each fund you hold. Federal rules require plans to give participants an annual fee disclosure, often called the 404(a)(5) notice, that lists each investment's expense ratio and any administrative fees charged to accounts. Find it on your plan's website or ask HR.

Small percentages add up over decades. As an illustration only, not a prediction: $100,000 that earns 6% a year before costs grows to about $314,700 after 20 years if total costs are 0.10% a year, and to about $265,300 if costs are 1.00% a year. That's a gap of roughly $49,000 from a difference of less than one percentage point.

A 401kGrade score gives up to 25 points for low administrative costs paid from plan assets, compared with plans of the same size. Form 5500 filings don't include fund expense ratios, so check those yourself on the fee disclosure.

4. The investment menu

A good menu doesn't need dozens of funds. Look for:

At least one low-cost, broad index fund for U.S. stocks, and ideally international stocks and bonds too.
A target-date fund series with reasonable expense ratios, which is a sensible one-fund choice for many people.
A Roth 401(k) option, which gives you a choice between paying tax now or later.

Warning signs include a menu made up mostly of high-cost actively managed funds, or one with no index option at all.

5. Helpful features and a clean record

Automatic enrollment and a sensible default investment are proven ways to get people saving, and they earn points in our score. On the other side, public filings reveal compliance problems: employee contributions deposited late, benefits not paid when due, losses from fraud, or a qualified audit opinion. A plan that reports those loses points, and you'll see each issue listed on its 401kGrade page under "Red flags from the filing."

How to check your plan in 20 minutes

Look up your employer's grade. You'll see employer dollars per participant against peers, costs, employee saving, features, and any red flags from the filing.
Read the match and vesting sections of your SPD. Write down the formula and how many years until you're fully vested.
Open your fee disclosure. Note the expense ratio of the funds you hold and of the cheapest index or target-date option.
Check your contribution rate. Are you saving enough to get the full match? Automatic-enrollment default rates are often lower than that.

Keep in mind that our grade is an estimate from public filings for one plan year. It's a starting point for questions, not a final verdict. Your SPD and fee disclosure are the authoritative documents for your plan.

What to do if your 401(k) isn't great

Still get the full match

Even in a high-cost plan, an employer match is usually a better deal than anything else available to you, because it's an immediate return on the money you put in. Contribute at least enough to collect all of it.

Pick the cheapest reasonable funds

In a weak plan, your fund choice matters more. A broad index fund or a low-cost target-date fund can cut what you pay even when the plan's overall costs are high.

Consider an IRA for savings beyond the match

Once you've captured the match, an IRA can be a cheaper place for your next dollars. For 2026 the IRS limit is $7,500, plus a $1,100 catch-up if you're 50 or older. Income limits apply to Roth IRA contributions and, if you're covered by a workplace plan, to deducting traditional IRA contributions. After that, you can return to the 401(k) for its higher limit: $24,500 in employee deferrals for 2026, plus an $8,000 catch-up at 50+ ($11,250 at ages 60–63), according to the IRS.

Speak up

Plan sponsors must run the plan in participants' interest, and many change plans when employees ask. A short, polite note to HR asking whether the company would consider adding low-cost index funds, a Roth option, or a faster vesting schedule costs nothing. Pointing to how similar employers compare, for example on a 401kGrade leaderboard, can help make the case.

When you leave, decide where the money goes

A weak plan is a good reason to move your balance when you change jobs. Read how to roll over an old 401(k) for the steps, and if you've lost track of old accounts, see how to find a lost or old 401(k).

The short version

A good 401(k) has meaningful employer money, fast vesting, low costs, a few cheap index or target-date funds, and a clean compliance record.
Check your plan's grade, then confirm details in your SPD and fee disclosure.
If it's weak, still get the match, choose the lowest-cost funds, and consider an IRA for extra savings.