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.

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).

©2025 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance; nor as the sole authority on any regulation, law or ruling as it applies to a specific plan or situation. Plan sponsors should consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.