The good news is that although you shouldn't ignore the account altogether, an annual checkup is really all you need. At that time, check that your investments are diversified according to your needs and goals. Diversification is the key to successful investment management, and it doesn't have to be complicated.

If you are just starting out in your 401(k) plan and you want the simplicity of only one investment, put your money into an S&P index fund or a well-diversified growth and income fund.

As you accumulate more money in your 401(k), diversify among different types of funds by adding a small cap fund and an international fund. You can move money from your index or growth and income fund to those funds or put your new contributions into them.

How to rebalance your 401(k) holdings

Let's say you have accumulated $5,000 in your index fund and you are ready to branch out. Your goal is to have 60 percent of your money in the index fund, 20 percent in small cap and 20 percent in international.