Plan Sponsors Ask Q&A 4Q25

Q: Despite our promoting the use of a financial planner or advisor in their retirement planning efforts (including our own plan advisor), most of our employees still don’t work with anyone. Are we the rule or the exception?

A: The Cerulli Report—U.S. Retirement End-Investor 2025 found that the majority (63%) of active 401(k) participants, many of whom fall into the mass-affluent category, do not work with a financial advisor. Meanwhile, 52% of mass-affluent active 401(k) participants who do not work with an advisor say their recordkeeper is their primary source of retirement planning and financial advice. Cerulli suggests that plan sponsors consider repositioning the 401(k) (or other workplace retirement plans) as a means to access financial planning, financial wellness platforms and other in-plan advice offerings, as well as engaging with participants when they are considering their other benefits.

Q: Are you aware of any current trends regarding plan fees for small plans versus larger plans?

A: The recently released 25th edition of the 401k Averages Book confirms a continuation of a long-running industry trend: both investment and recordkeeping fees are steadily declining, helping drive lower total plan costs for employers and participants. Average investment-related fees decreased across all plan sizes, with reductions ranging from 0.02% to 0.12%. Many plan scenarios also saw reductions in recordkeeping fees, in some cases by as much as 0.03%, reflecting ongoing pricing competition and transparency demands. Smaller plans still pay significantly more in fees than larger plans. A 15 million plan averages 1.08% in total costs, whereas a 150 million plan averages 0.76%.

Q: Can you provide clarification on the SECURE Act 2.0 mandatory Roth catch-up provision for high earners?

A: In 2026, mandatory Roth catch-up contributions for high-earning employees age 50 or older will become effective. Specifically, if an individual’s FICA wages from the same employer sponsoring the plan exceeded 1145,000 in the prior calendar year (indexed annually), then any “catch up” contributions they elect must be made on an after tax Roth basis for 401(k), 403(b) or governmental 457(b) plans. If a plan does not have an existing Roth provision, they are not required to add it, but they will not be able to allow those employees to use the existing catch-up contribution provision in the plan.