Deal With That Stinker of a 401(k)

You've probably heard this piece of financial advice ad nauseum: "Max out your workplace retirement plan. Now!"

For the most part, that sound bite is sound.

Except when it's not.

There are plenty of instances when it makes sense to shun your employer's 401(k), 403(b), or 457 plan and instead put your investment dollars into a self-directed IRA. You might consider this option if you answer "yes" to either of the following questions.

Q: Are you the footing the bill for the plan's expenses?

You can find out by asking someone in HR or your benefits department if fees are paid "at the plan level" (by your employer) or "at the participant level" (by you). The information on these fees will be listed in your plan's Summary Annual Report or the Summary Plan Description.

It is not uncommon to find out that you're shelling out 0.50% or more for the privilege of investing in your 401(k). Think about it: That's 0.50% of every single one of your investment dollars gobbled up in fees. Ouch.

Speaking of fees ...

Q: Are the mutual funds in your 401(k) charging plan participants more than they do on the retail side?

Mutual funds charge management fees. That's a given. What you shouldn't tolerate is paying more than Joe Schmo investing in the exact same fund through his IRA. It's worthwhile to compare the fees that a fund charges in your plan to what it charges outside it. (You can do so by entering its ticker symbol on the Yahoo! Quotes page.) The difference can be as much as 1%. Again, we're talking about shipping off a cut of your retirement dollars to pay for something you can possibly get for less just a couple of clicks away.

One way to fight the fee frenzy is to opt for funds that charge lower fees. In general, broadly based index mutual funds have the best low-cost track record. Again, do your comparisons.

Uh-Oh. Your 401(k)'s a Rip-Off. Now What?

You might be tempted to blow off contributing to your plan entirely. Don't. Even if you're paying killer fees, contribute just enough to get the full amount that your employer matches -- a.k.a. "free money." Granted, many employers these days have eliminated this perk, but if yours still offers it, do not leave that money on the table.

After you've done that, consider your other options:

Invest through your plan's brokerage. Some plans have what's called a "brokerage window" -- a service that lets you buy individual stocks. You'll still probably pay a trading fee, but if you're a buy-and-hold investor (and you are, right?!), then you may be better off buying stocks and ETFs than shelling out for fund fees.

Take an in-service distribution. This means you can take control of your money while you still work at the company. Again, not all plans offer this option. But if yours does, you can roll vested money into an IRA and buy funds or stocks on your own.

Lobby your boss and your benefits committee for a better plan. There's a good chance that the in-house folks who picked your plan are not even aware of all of the fees you (and they) are forced to pay just to save for retirement. For step-by-step instructions on lobbying the powers that be for a better plan, see "Dear Boss: Fix Our 401(k)." A much richer retirement may be just 30 minutes away.

Fool.com writer Dayana Yochim’s ideal match is a 401(k) plan with a generous employer match and a wide selection of low-cost index mutual funds.