If the 401(k) plan was an etch-a-sketch and I was king, I would shake that thing vigorously and start all over.
I mean, that crazy idea of forcing their to be ONE low fee index fund as an option in every portfolio? Which one? The S&P 500? The DJ Wilshire 5000 or Russell 3000? The MSCI or FTSE world? Nah, that's not NEARLY enough.
You'd really have to start from scratch. What a terrible terrible system. There is massive amounts of money in the system and the "beneficiaries" are getting NO benefit from the massive scale of their aggregate investments. Something along the lines of the Thrift Savings Plan (which I know the mutual fund industry hates) would be more in order.
At the least, you could at least have it be open source like a brokerage platform. But would be best for the most would be a narrow range of broad index funds at very low fee efficiently run, with the default selection being broad diversification and maybe shifting asset allocation toward fixed-income based on the age of the beneficiary.
The government was looking around at index funds as the basis for social security reform when the Bush administration was hot on that project, which has long since faded. It's just blazingly clear that for such a sophisticated investment culture, we're really lagging in the quality that we're offering to the retiree. It really IS 25 Years of Medicrity.
Not only is the 401(k) a racket, but it's a highly inefficient racket. Old school bookies were much more efficient at moving money around and keeping track of it all. So Just one index fund to every investor? Not good enough. Lets scrap the whole thing.