Measuring Up – Best practices for plan benchmarking
Ensuring a competitive and well-managed retirement plan is essential for attracting and retaining employees while maintaining fiduciary compliance. Benchmarking your retirement plan helps assess its effectiveness and identify areas for improvement. The following are key best practices for plan sponsors.
- Assess Fees and Expenses. Understanding the costs associated with your retirement plan is crucial. Compare investment management fees, recordkeeping costs and administrative expenses to industry standards. Excessive fees can erode participant savings, so seek cost-efficient solutions without sacrificing quality.
- Evaluate Investment Performance. Regularly review fund performance against relevant benchmarks and peer groups. Ensure the investment lineup remains diversified, aligns with participant needs and meets the long-term objectives of the plan.
- Analyze Participation and Contribution Rates. Monitor enrollment trends, deferral rates and employer matching contributions. Low participation may indicate the need for enhanced education, auto-enrollment or increased employer incentives.
- Compare Plan Features. Assess plan design elements such as vesting schedules, loan provisions and Roth options. Ensure your offerings align with industry trends and best support employee retirement readiness.
- Review Service Provider Performance. Evaluate the quality and responsiveness of plan administrators, recordkeepers and advisors. Conduct periodic due diligence to ensure you receive competitive services and pricing.
- Stay Compliant With Regulatory Changes. Retirement plan laws and regulations evolve frequently. Conduct regular compliance reviews and consult with legal or financial professionals to mitigate risks.
- Gather Employee Feedback. Survey employees to understand their retirement planning needs. Tailoring education and communication efforts can enhance their plan engagement and help improve retirement outcomes.
By implementing these best practices, plan sponsors can enhance plan efficiency, improve participant outcomes and fulfill their fiduciary responsibilities. Regular benchmarking ensures your retirement plan remains competitive, compliant and aligned with both employer and employee goals.
Footnotes:
Informational Resource: SoFi: “What Is 401(k) Plan Benchmarking?” (March 12, 2024); 401k TV: “Annual Benchmarking Is a Must for Plan Sponsors” (October 3, 2024).
For plan sponsor use only. Not for use with participants or the general public.
This information is not intended as authoritative guidance or tax or legal advice. You should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.
©2025 Kmotion, Inc. All rights reserved. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this newsletter are those of Kmotion. The articles and opinions are for general information only and are not intended to provide specific advice or recommendations for any individual. Nothing in this publication shall be construed as providing investment counseling or directing employees to participate in any investment program in any way. Please consult your financial advisor or other appropriate professional for further assistance with regard to your individual situation.
RP-264-0525 Tracking #750404 (Exp. 06/27)
