We have a similar, but more extreme, situation. Here's ours and how we decided, maybe that will help you think it through.
We each have a 401-K, mine has some very low cost index funds but sadly his is all American Funds with the lowest ER above 1%. In addition to that we are in the 25% tax bracket (assuming employment stays the same as last year).
The thought it, which is better? Take the tax deduction now but pay the outrageous fee for American Funds, or skip the tax deduction and do investing just in my 401-K and Roth's.
Taxes now, we are paying 25% for each dollar that doesn't go into the 401-K. That's pretty significant. Even taking into account the 1.41% ER for the fund we chose in American Funds (ugh), the likelihood that we will be in the 15% tax bracket in retirement, and the fact that DH is a contractor and so not likely to be in this job for many years, it would take something around 7 years before the expense ratio negated the tax advantages we have right now. There's no way he'll be in that job for 7 years, so we're maxing out his 401-K.
Now, if we were just in the 15% tax bracket, the answer would be different. That's what we figure the line is between benefiting more from the Roth or from the 401-K. For us personally, obviously every situation is different.
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Now, your case is not as bad as ours. Your 401-K has an index fund. It may not be the best one ever, but it is certainly not the worst! I would not be deterred from 401-K investing in your case, unless you have other reasons for investing in Roth's instead.