Maintaining a well-structured 401(k) plan is like keeping your home in top shape. Just because nothing appears amiss doesn’t mean everything is functioning at its best. Regular benchmarking of your retirement plan is akin to routine home inspections—it ensures everything remains 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. It’s crucial for transparency, making sure that fees remain reasonable and for evaluating investment performance to uncover better alternatives.

Stay Ahead with Proactive Benchmarking

Benchmarking is proactive. It documents fiduciary compliance, providing sponsors with peace of mind. The industry has shifted from reviewing plans every three years to conducting annual reviews due to rising fiduciary lawsuits and market changes. Regular assessments help spot hidden risks and prevent plan decay.

The Power of Cost Savings

Small reductions in fees can lead to significant savings over time. By identifying and eliminating unnecessary fees, benchmarking safeguards participant accounts and enhances retirement savings.

Enhancing Participant Engagement

Benchmarking isn’t just about numbers—it’s about people. It assesses participant engagement and retirement readiness, aiding in strategic enhancements like auto-enrollment, which can significantly boost participation rates. For instance, some plans have seen a 34% jump in enrollment by adopting these features.

Boosting Talent and Productivity

A competitive retirement plan boosts talent attraction and retention. On the flip side, underperforming plans can delay retirements, cost employers more in terms of healthcare, productivity, and salaries. Studies show it could cost an additional $50,000 annually for every worker who delays retirement due to financial unpreparedness.

Supporting Overall Plan Health

Beyond simple fee analysis, benchmarking tracks key performance indicators like participation rates and deferral metrics. This ongoing health monitoring is vital for driving better engagement and outcomes.

In conclusion, regular 401(k) benchmarking is a proactive strategy that fosters confidence, minimizes risks, and maximizes benefits. To stay ahead and ensure your plans are optimized, consider engaging an expert to review your setup regularly.