Your goal should be to find funds that cost less than that - if there are any. At the same time, you'll want to avoid the 401(k) scalpers lurking in your workplace menu.

Paul Yossem, an adviser with Wheeler/Frost Associates in San Diego, provided me with a great example of the kind of nasty surprises that can be stinking up your 401(k). Yossem, whose fee-only firm puts together 401(k) plans, was recently invited by a company to evaluate its workplace program.

Yossem determined that the average fund in the company's 401(k) lineup had an expense ratio of 1.8 percent, which isn't great. But several funds cost more than 2 percent a year, and one hideous option charged 3 percent, which I think qualifies it for the armed-robbery category.

You can check a fund's costs by looking at its prospectus, which you can easily download from the mutual fund's Web site. If you don't have Internet access, contact your 401(k) provider. You should also be able to obtain key facts about your fund by visiting Morningstar.com. Because funds can offer different share classes, which charge varying fees, you'll want to make sure you have the right fund ticker symbol.

Locating a fund's expense ratio won't necessarily reveal all your charges. You'll need to look further, for instance, if you invest in a lifestyle fund, which provides a one-stop mix of stocks, bond and cash that's packaged for conservative, moderate or aggressive investors.

Lifestyle funds are often slapped with an extra fee that may range from an additional 0.25 percent to 1 percent. You might not uncover this cost unless you hunt for the footnotes in a prospectus.

You also should check to see if you are paying a wrap fee with plans that are arranged by stockbrokers, commissioned financial advisers and insurance companies. If you're unlucky enough to invest in a 401(k) that relies upon an insurance company annuity, you will certainly be paying more than just the expenses for the mutual funds, which are called sub accounts in annuity lingo.

In some 401(k) group annuity plans, Yossem has uncovered expenses that have reached as high as 5 percent. I gasped when he told me that.

You should, by the way, be just as price-conscious if you're investing in a 403(b) plan, which is the type of account that teachers use. Educators enjoy one advantage over the working stiffs that are chafing at their employers' ragtag 401(k) lineups: Teachers aren't locked into one 403(b) provider.

They are free to find a 403(b) on their own, but this responsibility comes with its own perils. Despite the ability to choose lower-cost plans, millions of teachers select variable annuities with high fees, unnecessary insurance charges and generally miserable returns.

Teachers get stuck with these dogs because they trust the salesmen who corner them in the faculty lounge or finagle an invitation to their homes. The lower-cost options, such as those provided by Vanguard Group, T. Rowe Price, TIAA-CREF and Fidelity Investments, don't dispatch people to schools to drum up business. Enterprising teachers must contact these firms by telephone.

- Take a hike.

What happens if your 401(k) is grotesquely expensive? You may want to consider limiting your 401(k) investments to only the amount needed to secure your employer's yearly matching contribution. An excellent alternative for additional investments is an Individual Retirement Account.

For almost everyone, the best IRA choice is a Roth IRA. If you are at least 50, you're free to contribute up to $5,000 into an IRA this year. Younger investors can chip in $4,000. If you can afford to kick in even more money after maxing out an IRA, I'd recommend putting the rest of your cash in low-cost, tax-efficient mutual funds in a taxable account.

Of course, you'll be in worse shape financially if you stop your 401(k) contributions and never bother feeding your backup IRA. To prevent this nightmare from happening, here's a better alternative: Before you cut back or eliminate 401(k) contributions, make sure you've set up an automatic deposit feature for your IRA. You can have money taken out of your savings or checking account on the same day every month.

- Scatter your money.

Of course, costs aren't the only reason you need to remain alert. Too many employees think that they're investment geniuses if they've divided their money among a handful of mutual funds. But they may or may not be diversified. You won't know unless you understand what the investment mission is for each of your mutual funds. Once again, you can turn to the prospectus or Morningstar to investigate a fund's mission.

Ultimately, what you want to own is a basket of investments that includes the major investing categories. A typical investor should own funds that invest in large-company stocks, small-company stocks, foreign stocks and a bond fund. And if they are low cost, all the better.

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