Short answer: To pick index funds in your 401(k), first contribute enough to get any employer match, then find your plan’s fee comparison chart and look for the funds with the lowest expense ratios, including index-based collective investment trusts (CITs) that may have no ticker. For 2026, the IRS lets you contribute up to $24,500, with higher catch-up limits from age 50.
For most Americans, a 401(k) is where the bulk of their investing happens. But unlike a brokerage account, you can’t buy anything you like: you choose from a menu your employer has picked. Some menus are excellent. Others are full of expensive funds with a couple of cheap index funds hidden among them.
This guide explains how to read your plan’s menu, find the index funds in it, and build a simple, low-cost mix, using the rules and disclosures your plan is required to give you.
Start with the free money
Before thinking about which funds to pick, make sure you’re getting your employer’s full match, if your plan has one. Vanguard’s How America Saves 2026 report, which covers the plans Vanguard administers, found that 96% of its plans provided an employer contribution in 2025. The most common formula was “$0.50 per dollar on the first 6% of pay,” and the average promised match was worth 4.7% of pay (Vanguard).
A match is an immediate return on your money that no index fund can beat. If you contribute less than the amount needed to get all of it, that’s usually the first thing to fix.
The 2026 limits
According to the IRS, for 2026 (IRS):
- Employee contributions: up to $24,500.
- Catch-up contributions at 50 and over: an extra $8,000.
- Ages 60 to 63: a higher catch-up of $11,250 instead of $8,000.
- Total from you and your employer combined: up to $72,000, not counting catch-up contributions (IRS Notice 2025-67).
A new rule also applies to higher earners: if you earned more than $150,000 in wages from your employer in 2025, your catch-up contributions in 2026 generally have to go into the Roth side of the plan. Vanguard’s report summarizes it this way: “Starting in January 2026, participants age 50 or older who earned more than $150,000 in the previous year may make catch-up contributions only to Roth.”
Step 1: find your plan’s fee disclosure
You don’t have to guess what your funds cost. Federal rules require your plan to tell you. Under the Department of Labor’s participant disclosure regulation, plans must show each investment option’s “total annual operating expenses of the investment expressed as a percentage” and as “a dollar amount for a $1,000 investment,” along with returns over “1-, 5-, and 10-calendar year periods” compared with “an appropriate broad-based securities market index” (29 CFR 2550.404a-5).
This information must be presented “in a chart or similar format that is designed to facilitate a comparison.” It’s usually called the investment or fee comparison chart, and you’ll find it on your plan’s website or in your enrollment materials.
That chart is the most useful document you have. Everything below starts from it.
Step 2: spot the index funds
Look for funds with “Index” in the name, or names that mention a market index such as “S&P 500,” “Total Stock Market,” “Total International,” “Aggregate Bond” or “Total Bond.” Then check the expense ratio column. Broad index funds are usually the cheapest options on the menu, often well under 0.10% a year.
The Department of Labor’s guide to 401(k) fees explains why: “Funds that are ‘passively managed’ generally have lower management fees. Passively managed funds seek to obtain the investment results of an established market index, such as the Standard and Poor’s 500, by duplicating the holdings included in the index” (DOL).
A typical menu doesn’t have many of them. Vanguard’s report found that its plans offered an average of 17.7 investment options in 2025, while participants used an average of just 2.2.
What if there’s no ticker?
Many 401(k) funds don’t have a ticker symbol you can look up online. That usually means they’re collective investment trusts (CITs) rather than mutual funds. Investor.gov describes a CIT as “a pooled investment vehicle that combines the money of multiple investors into a single portfolio,” and notes that “unlike mutual funds, they generally are not regulated by the SEC” (Investor.gov). They’re available to individuals “only through certain tax-qualified retirement plans, like 401(k)s.”
A CIT that tracks an index works the same way as an index mutual fund, and it’s often cheaper. You just won’t find it on public fund websites: its fees and returns will be in your plan’s comparison chart and fact sheets.
Step 3: pick a simple mix
Once you know which index funds your plan offers, there are two straightforward ways to use them.
Option one: a single target-date fund. If your plan’s target-date series is built from index funds and is cheap, one fund with the year closest to your retirement can be your entire 401(k). Vanguard found that 96% of its plans offered target-date funds. Our guide to target-date index funds explains how they work and why the cost varies so much.
Option two: build it yourself from index funds. Most plans with a decent index lineup let you recreate the classic three-fund portfolio:
| Building block | What to look for |
|---|---|
| U.S. stocks | A total stock market or S&P 500 index fund |
| International stocks | A total international or international index fund |
| Bonds | A total bond market or aggregate bond index fund |
If your plan has an S&P 500 fund but no total market fund, the S&P 500 fund is a fine substitute; our comparison of total market and S&P 500 funds explains why the difference is small. If it has no international index fund, holding international stocks in an IRA instead is one solution.
How much to put in stocks versus bonds depends mostly on how far you are from retirement and how much volatility you can live with.
Why fees matter so much here
A 401(k) is a decades-long investment, so small fee differences compound. The Department of Labor gives an example: an employee with 35 years until retirement and a balance of $25,000. “If returns on investments in your account over the next 35 years average 7 percent and fees and expenses reduce your average returns by 0.5 percent, your account balance will grow to $227,000 at retirement, even if there are no further contributions to your account.” But “if fees and expenses are 1.5 percent, however, your account balance will grow to only $163,000. The 1 percent difference in fees and expenses would reduce your account balance at retirement by 28 percent.”
Index funds help keep costs down. According to the Investment Company Institute, 401(k) participants who invested in equity mutual funds paid 0.27% on average in 2025 (ICI), and index equity mutual funds across the industry had an asset-weighted average expense ratio of 0.05% (ICI). Our guide to expense ratios shows how to compare them.
Note that some plans also charge administrative fees on top of fund expenses. Those apply to everyone in the plan regardless of what you choose, so they shouldn’t change which funds you pick, but they’re worth knowing about.
What if your plan’s menu is poor?
Some plans have no low-cost index funds at all. In that case:
- Still contribute enough to get the full match. The match usually outweighs high fees.
- Choose the cheapest reasonable options for each building block, even if they aren’t index funds.
- Consider investing beyond the match in an IRA, where you can choose any index fund. Our guide to Roth IRAs and taxable accounts covers the trade-offs.
- Check for a brokerage window. Some plans offer what FINRA calls “self-directed brokerage accounts, also known as brokerage windows, which allow you to select investments from the full range of stocks, bonds, mutual funds and other types of assets offered by the brokerage firm” (FINRA). They may carry extra fees.
- Tell your employer. Plan sponsors review their menus, and employee feedback about high-cost options can make a difference.
Roth or traditional?
Most plans now offer both. Vanguard found that 98% of its plans offered Roth contributions in 2025. Traditional contributions reduce your taxes now and are taxed when you withdraw; Roth contributions are taxed now and come out tax-free later if you meet the rules. Which is better depends mostly on whether you expect your tax rate to be higher now or in retirement. It doesn’t change which index funds you pick.
Common questions
My plan automatically put me in a target-date fund. Should I change it? Not necessarily. Check its expense ratio in your plan’s comparison chart. If it’s an index-based series charging a low fee, it may be exactly what you need. Vanguard found that 61% of its plans used automatic enrollment, and target-date funds are the usual default.
How often should I check or rebalance? Once a year is plenty for most people. A target-date fund rebalances for you.
What happens to my 401(k) if I change jobs? You can usually leave it in the old plan, move it to your new employer’s plan or roll it into an IRA. Rolling it over can give you access to more index funds.
Is it better to hold bonds in my 401(k) or elsewhere? Because bond interest is taxed as ordinary income in a regular account, many investors prefer to hold their bond funds in tax-advantaged accounts like a 401(k).
The bottom line
Picking index funds in a 401(k) comes down to four steps: get the full match, find your plan’s fee comparison chart, identify the low-cost index funds (including CITs without tickers), and either choose a cheap index-based target-date fund or build a simple mix of U.S. stocks, international stocks and bonds. The menu may be limited, but the rules guarantee you the information to choose well.
This article is general information, not personal investment or tax advice. Plan rules vary; check your plan documents. See our Financial Disclaimer.
Sources
- Internal Revenue Service, 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 and Notice 2025-67 (2026 limits, total contribution limit and Roth catch-up wage threshold).
- U.S. Department of Labor, 29 CFR 2550.404a-5 (participant fee disclosure) and A Look at 401(k) Plan Fees.
- Vanguard, How America Saves 2026 (data for Vanguard-administered plans, 2025).
- SEC, Investor.gov, Collective Investment Trust.
- FINRA, Retirement Accounts.
- Investment Company Institute, The Economics of Providing 401(k) Plans, 2025 and Trends in the Expenses and Fees of Funds, 2025.
Sources checked on October 1, 2026.