New research shows that 401(k) participants with lower salaries have smaller plan balances, compared to those with higher salaries and those nearing retirement tend to do a poor job on managing their investments.

Financial Engines, a California-based investment advice firm, studied nearly 1 million 401(k) participant portfolios to determine how well Americans are handling their 401(k) accounts.

The firm found that 69% of participants have 401(k) portfolios with inappropriate risk and/or diversification, while 36% hold high concentrations of company stock, and 33% fail to contribute enough to receive the full company match.

"Throughout this report, the data show that those who need the 401(k) the most are benefiting from it the least," says Jeff Maggioncalda, president and CEO of Financial Engines.

For instance, older workers are more likely to have a higher concentration of company stock in their portfolios. According to the study, 43% of those over age 60 hold more than 20% of their 401(k) portfolios in company stock, compared to only 28% of those under age 30.

Yet, holding high levels of company equity has a negative impact on the expected growth of a portfolio, the study reports. Defined contribution accounts with more than 20% in company stock could expect an average of 18% less projected retirement wealth after 20 years, compared to those holding less than 10% in company stock.

"Unfortunately, the older employees holding the highest amounts of company stock have the least amount of time to recover if their company's stock happens to take a hit," explains Maggioncalda. "Many participants don't realize that holding large amounts of company stock is actually a drag on the long-term growth of their portfolios."

The report also found that 53% of participants earning below $25,000 a year have portfolios with very inappropriate risk and/or diversification, compared to 33% of those earning more than $100,000 per year.

Researchers further explain that the inappropriate risk or diversification resulted from high money market or stable value concentrations, age-inappropriate portfolios (i.e. too conservative for younger employees or too aggressive for older employees) and too much concentration in a single asset class.