WORKERS' OPTIONS WIDE OPEN WITH SELF-CONTROL 401(K) PLAN.

Byline: Sana Siwolop The New York Times

Given the thousands of flavors that investments come in these days, the situation is hardly unexpected: Many workers chafe at the handful of options that their companies, carefully or not, have selected for their 401(k) retirement plans.

``Why is there no bond investment in the mix?'' they may ask. ``And why not include this delicious foreign equity fund?''

Responding to these kinds of complaints, as well as to government guidelines on the subject, companies have added to their 401(k) menus in recent years, expanding from the three or four funds that used to be standard to one dozen, two dozen or more.

But they also have begun to embrace a radically different option that can forever put to rest the complaints about too little choice, even if it can be risky for many workers. It is a self-managed 401(k) account that lets an employee choose among thousands of stocks, bonds and funds while still being able to invest in the plan's other choices.

H.D. Harden Jr., an industrial engineering manager, is one worker who has embraced the new alternative. When his employer, the Westinghouse Motor Co. in Round Rock, Texas, added the self-managed option this year, he realigned his 401(k) to put $11,000 in the account, which is held by the Charles Schwab Corp., the discount broker.

Harden can now do things he never could before with his 401(k). Since March, he has bought individual stocks like Cypress Semiconductor, Pepsico and Panaco, an oil and gas company. And his new investment horizons excite him. ``I was intrigued by the challenge,'' he said, noting that he had never before bought stocks directly.

Yet he also typifies the concerns of those who are worried by the rise of this approach, sometimes called the ``brokerage'' option: After just a few weeks, his $11,000 has been reduced by nearly $500 in stock-price declines and commissions.

Nonetheless, such self-management is growing. For a few years, it showed up mostly in small professional organizations of doctors, lawyers or pilots - workers with relatively high salaries. Then corporations joined. The State Street Bank and Trust Co. in Boston, for example, oversees such plans for 45 companies, including Pepsico.

The option turned blue collar in April, when the International Brotherhood of Teamsters developed a model 401(k) plan that included it with five other investment alternatives, including a bond fund, a diversified stock fund and a Standard & Poor's 500 index fund.

About a million Teamsters will be eligible for the self-managed option, which was developed by State Street, if their employers agree. At least one company, Ryder Automotive Operations, which employs more than 3,500 Teamsters, already has said yes.

Rand Wilson, a union spokesman, said his organization had decided to go with the self-managed option as a way to offer more flexibility to a diverse group of members.

``Frankly, I think more of our members will choose the other options in the plan for professional management of their money,'' he said. ``But who knows? Let's see what happens.''

Whether union members embrace the option or not, many retirement experts suspect it will pop up more and more. It is already a feature of 3.2 percent of profit-sharing and retirement plans, according to a survey of plans at 377 companies by the Profit Sharing/401(k) Council of America.

``We've found that the interest is very wide and that it cuts across all industries,'' said Tom Schlossberg, the president of Diversified Investment Advisors in Purchase, N.Y.

The firm began offering the self-managed option to its clients - which together administer 401(k)s for about 350,000 employees - about a year ago. Since then, about 80 percent of the clients have considered the option, and 30 percent have taken it, he said.

The precise scope of the brokerage options, as well as annual fees, commissions and trading limits, can vary. In a version from Dreyfus, workers can buy and sell any publicly traded securities and invest in 3,000 to 4,000 mutual funds. But while the Teamsters plan also allows for broad trading of stocks, its members choose from fewer mutual funds - about 2,000.

Companies see several advantages in the option, said Bob Stone, executive vice president of Dreyfus Retirement Services, which began offering it to clients about a year and a half ago. Not only does the option give employees great choice, but it is also perhaps the only approach that will satisfy the highly vocal minority of employees whom Stone describes as ``tinkerers.''

``These are the people who no matter what a plan sponsor does, thinks it usually isn't enough,'' he said. ``Either they want more options, or more aggressive options, or something else entirely.''

The option also skirts the problem of too many investment choices, said Philip Lussier, a managing director at State Street Global Advisors, the investment arm of State Street Bank and Trust.

``What a plan sponsor doesn't want to do is overwhelm employees,'' he said. ``So most establish six or seven core funds, and then add a self-directed account to provide options for relatively sophisticated investors.''

CAPTION(S):

2 Charts

Chart: (1) A Wealth of Choices...

(2) ...Doesn't Mean Ri ch Returns

The New York Times