Why Regular 401(k) Benchmarking is Essential for Your Company

Think of your 401(k) plan like maintaining a well-built home. Even the sturdiest structures need regular check-ups to remain optimal. Similarly, a 401(k) that's functioning correctly now might not be operating at its best without regular benchmarking.

Understanding 401(k) Benchmarking

At its core, benchmarking involves comparing your plan’s features against industry standards. This includes evaluating investment performance, participant outcomes, and fees.

Fee Transparency

Benchmarking ensures that your plan's fees remain reasonable and transparent. Just as unchecked home maintenance can lead to costly repairs, unnoticed fee increases can erode participant savings over time.

Evaluating Investments

Regular reviews open the door to identifying better investment alternatives, ensuring participants are on track for successful retirement outcomes.

Participant Engagement

Assessing participant engagement and readiness is key to strengthening your plan. Active participation drives better retirement readiness, much like regular home maintenance prevents future issues.

Documenting Compliance

Benchmarking is crucial for documenting fiduciary compliance, offering peace of mind to plan sponsors and aligning with best practices under the Employee Retirement Income Security Act.

Industry Shifts

The landscape is changing. With increasing fiduciary lawsuits and market volatility, the shift to annual reviews—from the previous three-year norm—is becoming common practice. This proactive approach helps you stay ahead and avoid surprises.

At the end of the day, regular 401(k) benchmarking isn’t just about fixing what's broken. It’s about ensuring everything runs smoothly. Imagine the benefits of eliminating unnecessary fees or selecting enhanced investment options. By staying proactive, you’re not only safeguarding your plan but also empowering employees to achieve their retirement goals.

For companies looking to maintain robust and compliant retirement plans, seeking expert help can make all the difference. Remember, just as a home needs care to thrive over time, so does your 401(k).