How does your company’s plan compare to the rest? Benchmarking your plan on a regular basis is critical for compliance and your plan’s success!
Comparing your retirement plan with others that are similar in size and type can help you achieve four critical goals:
- IT HELPS YOU manage your fiduciary responsibilities. ERISA requires plan fiduciaries to:
- monitor and benchmark service providers for fee reasonableness
- regularly monitor and review the plan’s investment options to ensure they are performing as expected
- IT COULD SAVE your plan and participants money. Submitting requests for proposal (RFPs) every year or so may help you:
- gain leverage to renegotiate fees with existing providers if the current provider is charging more than the industry average
- reduce fees, even by a few basis points, something favorable for participants because it means potentially larger gains in their account balances at retirement
- IT CAN CONFIRM your plan’s service providers are still providing value. Plus:
- plans may outgrow their service providers over time
- benchmarking is a good way to review your current service providers and determine if you need to shop around for new ones
- IT MAY HELP improve your plan design and features. Plan design best practices have evolved in recent years.
- potentially increasing participation and savings rates by implementing auto-features such that the fund lineup may need a refresh
- Identify opportunities to improve the plan’s features and offerings, which could potentially help attract and retain employees and increase participation
- providing an opportunity for you to review your plan documents, structure and design to ensure they are in line with current industry standards
Contact us today to strategize ways to measure your 401(k) plan and help to enhance your valuable employee benefit.
This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.