Employers sponsoring 401(k) plans are required to give employees the information and ability to manage their own accounts, using the investment options provided to them by the plan administrator and custodian.

Sometimes employers and 401(k) custodians will provide employees with simplified systems by which to determine what kinds of investments appeal to them, and how they would like to allocate their portfolio in pursuit of their retirement goals.

Oftentimes this does not translate into any real understanding of the investments being held or the risks inherent to them. The industry is increasingly trying to regulate and standardize the systems by which plan participants are ushered into their retirement accounts, and to increase the transparency of the investments and the fund expenses.

Many participants do not realize that they alone bear the risk of market losses, despite the disclosures that accompany the plan agreements. A short online questionnaire and a pie chart may be all the participant knows about where their retirement funds are placed.

There is much to be said for automatic enrollment, and for making it simple for people to invest with an eye toward the future, but the educational component is often lacking. The sponsoring employer and the plan custodian will have picked out maybe 5-15 mutual funds or other investment options, and it is up to the participant to keep up with the account and to decide when it is time to be bullish or bearish.

Most of the funds offered within 401(k) plans today are target-date funds, blended funds, or various index funds.