Employers, concerned that unguided participants could start to voice their dismay over disappointing returns—possibly making the case that plan sponsors were not fulfilling their fiduciary duties—are taking action to ensure that retirement savers get on the right track.
One solution that employers have turned to is something called re-enrollment. It moves employees out of self-directed investment plans.
Much like auto-enrollment for new employees—who are defaulted in to target date funds across many plans—re-enrollment defaults all employees into target-date funds. Employers often use this tactic when they transition to a new plan provider. However, there has been an uptick in plan sponsors who are re-enrolling without changing providers. It's a sign that resetting employee investments into more balanced portfolios is becoming a priority.
(Read more: Signs that your 401(k) really stinks)
In order to go back to your "do it yourself" investment strategy, plan participants must choose to opt-out on their own and then decide on where they want to stash their cash. Hess said, "When re-enrollment happens, they are staying." Only a third or less decide to opt out once they have been re-enrolled into default funds, JPMorgan found.
David Blanchett, head of retirement research at Morningstar Investment Management, said he would recommend plans go even further than only taking advantage of a plan move to re-enroll employees in target-date funds.
Blanchett thinks plans should re-enroll participants every year in target-date funds—or require them to opt out—even when the plan is not changing administrator. "One thing that I am certain the research on individual investors shows is that when it comes to investment decisions, people are bad investors," Blanchett said.
Do-it-yourself investors "need to be forced to revisit that decision once a year," Blanchett said. He said the problem is particularly acute for participants who have already been in plans for five to 10 years and may have enrolled before there were target-date funds.
"It's relatively uncommon to re-enroll automatically in target-date funds because it costs a bit, but it is the best outcome for participants," Blanchett said.
—By Anthony Volastro, CNBC Segment Producer