“However, as much as I like the tax-favored status of 401(k) plans and IRAs, I need to tell you something heretical, something almost nobody else will come out and say: Most company 401(k) plans stink,” he said.
“They have high management fees and administrative costs that eat into your returns, and worst of all, they typically offer you lousy choices for your investments and not nearly enough control over them,” Cramer added. “The 401(k) business is a racket for the managers who get to charge you these fees.
“Sometimes it feels like the whole 401k system was set up to benefit the financial services industry, not you. And given the way Washington works I wouldn't be surprised if that was actually the case.”
Nevertheless, Cramer added, contributing to a 401(k) is still too good to pass up for its tax-blessed nature.