What is a primary concern of market volatility for 401(k) participants?

Market volatility poses a significant concern for 401(k) participants primarily because it directly impacts the value of their retirement savings. Fluctuations in the market can lead to periods of reduced account balances, especially if participants are close to retirement or have a significant portion of their investments in equities or variable funds.

When the market experiences downturns, the value of invested assets can decrease sharply, which may ultimately result in less money saved for retirement when participants need to rely on those funds. This potential for decreased retirement savings is a critical issue, as it undermines the financial security and preparation for retirement that 401(k) plans are designed to promote.

While increased administrative fees, legal challenges, and caps on employer match contributions are important considerations in the overall management and structure of 401(k) plans, they do not have the immediate and direct impact on participants' retirement portfolios that market volatility does. Therefore, understanding the implications of market fluctuations is essential for participants in making informed decisions about their investments and long-term financial goals.