Imagine maintaining a well-built home; just because nothing looks amiss doesn’t mean issues aren’t lurking beneath the surface. Similarly, even the most structured 401(k) plans require regular attention to stay compliant, cost-effective, and aligned with participant goals.

What is 401(k) Benchmarking?

401(k) benchmarking involves comparing a plan’s features, fees, investment performance, and participant outcomes against industry standards. This helps ensure that the fees remain reasonable, transparent, and competitive.

Evaluating Investment Performance

Regular reviews evaluate investment performance and can uncover better alternatives, keeping the plan agile and beneficial for all participants.

Participant Engagement

Understanding participant engagement and retirement readiness is key. Benchmarking highlights areas for improvement to enhance overall plan success.

Fiduciary Compliance

Documenting fiduciary compliance is critical for peace of mind for plan sponsors. Benchmarking provides evidence of due diligence, reducing fiduciary liability.

The Industry Shift

Due to rising fiduciary lawsuits and market changes, the trend has shifted from reviewing every three years to annual reviews, ensuring plans are consistently optimized.

Practical Examples

Consider the impact of unchecked fees, which can erode retirement savings over time. Conversely, identifying better investment options can significantly improve outcomes for participants.

Staying proactive with regular benchmarking will help you anticipate and prevent issues. Remember, even a well-structured retirement plan benefits from expert reviews to ensure it meets evolving needs. Seek professional guidance to maintain its health and effectiveness.