There are many good reasons to save for retirement in a 401(k). Not only is contributing through an employer a seamless process, but 401(k)s offer much higher annual contribution limits than IRAs. Currently, workers under age 50 can put up to $18,000 a year into a 401(k), while those aged 50 and over can contribute up to $24,000 a year. With an IRA, these limits are only $5,500 and $6,500, respectively.
Still, a large number of workers who are eligible to fund a 401(k) choose not to do so. Of the 79% of Americans who work for employers that sponsor retirement plans, only 41% opt to participate. And while much of that boils down to poor budgeting, excessive spending, and misplaced financial priorities, we can't discount the fact that some workers might be shunning their 401(k)s because their plans are downright lousy.
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Source: Fool.com