Why Regular 401(k) Benchmarking Matters

Think of your 401(k) plan like a well-built home—it stands strong only with regular maintenance. Even when nothing appears visibly wrong, periodic reviews ensure everything runs optimally. This is the idea behind regular 401(k) benchmarking—a crucial practice for staying compliant and aligned with participant goals.

Understanding 401(k) Benchmarking

Benchmarking involves comparing a plan’s features, fees, investment performance, and participant outcomes against industry standards. It's not just about finding issues but ensuring fees remain transparent and investments perform well. Regular reviews open doors to better alternatives, improving participant outcomes.

Protecting Against Cost Creep and Ensuring Compliance

Benchmarking helps identify unreasonable fees, which can erode savings over time. A plan adjusted from a 1.5% fee to 0.1% could mean significant savings over decades. Furthermore, it documents fiduciary compliance, supporting peace of mind for sponsors.

The Value of Participant Engagement

Assessing participant engagement through benchmarking reveals insights into retirement readiness. By implementing changes like auto-enrollment, plans have seen dramatic improvements in participation rates.

Industry Trends and Best Practices

Industry trends now show a shift from triennial to annual reviews, driven by rising fiduciary lawsuits. This proactive approach aligns with broader benefits benchmarking trends and ensures plan health is monitored effectively.

Closing Thoughts

Benchmarking is a proactive measure that addresses hidden risks before they become problems. As companies strive to retain talent, a competitive retirement plan through effective benchmarking becomes vital. Consider seeking expert help to ensure your plan is both optimized and compliant.