Of the three broad reform themes, the advice issue is the big hang-up between the House and Senate bills. Before any bill makes it to the President's desk, there will have to be a compromise.

How to advise?

Making it easy to provide workers with advice is the easy part. "The way the law is structured now it discourages companies from providing advice," said Dana Muir, a professor at the University of Michigan Business School.

But determining who should provide advice is another issue.

In any case, it's clear that workers want more help. In a recent 401(k) survey sponsored by John Hancock, 75 percent of respondents said they wanted an expert to provide investment advice and a similar percentage wanted an advisor to affirm their selections.

Wray said 41 percent of its members are already providing advice by providing Web-based tools such from Financial Engines and Morningstar and in some cases telephone support.

Most agree more options are needed. John Boehner, R-Ohio, is sponsoring a bill that would allow 401(k) plan providers to give advice with qualified financial planners. Meanwhile, Senator Jeff Bingaman, D-New Mexico, is shepherding a bill that would ban any advisor with ties to 401(k) offerings to give investors advice.

Supporters of Boehner's bill say it has the appropriate safeguards in the form of disclosure and stiff penalties. Meanwhile, the Bingaman camp argues there shouldn't be any conflicts in financial advice.

"We provide a good framework with built-in protections, including a penalty where 401(k) managers could lose the ability to be a fiduciary at all," said Kevin Smith, a spokesman for Boehner. "Companies shouldn't be precluded from using a Schwab or Fidelity, which can bundle advice at a cheaper cost."

Jude McCartin, a spokeswoman for Bingaman, counters that Boehner's plan is a recipe for disaster. "We don't want conflicted advice at all," she said. "Disclosing that they may benefit isn't enough."

In practice, however, both approaches to the advice game have their problems.

David Certner, director of federal affairs for the American Association for Retired Persons, said Boehner's bill could inspire more companies to give advice, but potentially weakening existing conflict of interest rules is just a bad idea. Wray counters that Bingaman's approach may be "too tight."

To Louis Stanasolovich, CEO of Pittsburgh-based Legend Financial Advisors, the best solution between the two approaches is probably in the middle.

In a multi-fund 401(k) plan, he'd be opposed to one mutual fund firm offering advice and telling investors they couldn't buy funds from a rival. However, Stanasolovich didn't have an issue with mutual fund advising asset allocations of its own products.

Ideally, an independent advisor would be providing advice such as Bingaman suggests, but he'd have to be independent from company influence. Will the advisor recommend company stock if the same company is contracting him?

And then there's a big question of whether companies could hire independent advisors, who could wind up being sued if returns falter.

"I've been asked to come in and provide advice to 401(k) investors, but have had to turn them down because the company wasn't offering the best selection of funds," said Stanasolovich. "Ethically, you have to turn that down."

The future

To Stanasolovich, corporations shoulder much of the blame for the 401(k) problems because they offer weak investment selections-a problem none of the bills on Capitol Hill address.

Many 401(k) plans go with turnkey offerings from the likes of Fidelity, Vanguard and others. However, that approach may not give the best selection of funds.

"You can't get diversified with some groups," he said. "Companies are telling employees to do it yourself with bad choices."

Stanasolovich, like other observers, advocates a more open platform, where choices abound.

One potential option would be for the corporation to offer a hybrid solution where it manages the money as it would a pension plan. The big difference, however, is the employee contributes and the corporation hires a private money manager.

And if a company didn't meet a minimum return, it would have to make up the difference.

"You should be able to buy any mutual fund you want, and if that gets confusing you can opt for a managed account," said Stanasolovich, who manages money for his workers' 401(k) plans and has a three-year loss of 7 percent.

A more fluid 401(k) system would be welcome, Muir said, but added that plan participants may just become more confused. "The big issue is whether people will make the right choices," she said.

Saving investors from themselves?

Muir's question gets to the philosophical question that frames the whole 401(k) debate: How much can the government save investors from bad choices?

Some employees in the middle of the Enron and Worldcom horror stories watched their retirement dwindle because they chose to have one stock in their plan. There were other choices, but they didn't take them.

Even considering current limitations and matching contributions with corporate stock, there was nothing keeping participants from diversifying with the rest of their funds.

Statistics tell the tale. According to John Hancock's survey, more than 50 percent of respondents spend a half hour or less managing their 401(k) funds. "Most people are competent enough to figure this out, but don't want to," Muir said.

The survey also found that only 41 percent have transferred funds or changed allocation or contribution levels.

With those gloomy stats, it's no wonder analysts are questioning whether investors can handle their own money.

"There's such a high bar to clear to do it yourself," said McCartin. "It's not a lack of interest, but a lack of access."

Stanasolovich isn't so sure. "If you ask portfolio managers most think it's ludicrous that people are directing their own money," he said. "Most don't have a clue about asset allocation."

Analysts said the key for investors is to get a clue. There a plenty of investment primers on the Web at sites such as MSN Money and Quicken.

No interest in investing? Well, you really have no choice. The 401(k) plan is likely to be your primary retirement vehicle for a while.

Old-fashioned pension systems where corporations paid out a guaranteed sum in retirement are a thing of the past largely because they are too expensive, said analysts.

"I don't see a movement back to defined benefit plans," said Muir. "Employees don't have the bargaining power to demand them and those plans have been hit hard too."

In fact, analysts said traditional pension systems are the next thing to be targeted by reformers, especially since many corporations are having problems funding them. And that means you're stuck with the 401(k).

"There's nothing wrong with 401(k)s as long as they are diversified, and plan sponsors step up and offer a better managed option," Stanasolovich said. "But until we get that, there will be problems."