Some 401k's have really great options though. Mine has an SSgA SP500 index fund with an expense ratio of 0.005% which is even better than their SPY ETF.
That's insane! Are you sure? It must be subsidized by your employer. Or you're looking at some fee charged on top of the ER that's inside the fund. How else could it be literally 10 times more efficient than Vanguard?
It's actually less than 0.005%. On the Performance Summary for the 401k choices it used to show 0.00% for net expense ratio and I thought it was employer subsidized. But, I recently found this note at the end of the document:
(7) The net expense ratio for the SSgA Large Cap Index Fund is less than 0.005% (less than half of a basis point) and has historically been shown as 0.00% due to rounding.
Not bad, eh? :-)
Right now, the gross expense ratio is 0.01% and the net is as shown in note 7. So, either SSgA is giving us a break on the ER or employer is subsidizing some. A lot of funds have lower net ER than gross ER so I think it is SSgA giving us a break. Worst case, even if they get rid of the break it will go up to 0.01%
State Street Global Advisors (SSgA) is another big fish in the pond along with Vanguard, Fidelity, etc.
EDIT - one more interesting tidbit. The ER is so low that the performance of the fund since inception, 7/01/07, to EOY 2014 is 6.63% vs 6.57% for the SP500. The index fund actually performed
BETTER than the SP500. I'm guessing this is because of price differences of when stocks were bought/sold to reflect changes in SP500, etc the performance ended up being a little better and it shows up since there is literally no drag from ER.