Plan Sponsors Ask- Q&A Q2 2025

Q: How often should we benchmark our plan fees?

A: According to Callan’s 2024 DC Trends Survey, two-thirds of plan sponsors were either somewhat or very likely to conduct a fee study in 2024. As a result, nearly half of plan sponsors were able to reduce their plan fees. As a fiduciary, plan sponsors are responsible for ensuring that the services provided to their plans are necessary and that the cost of those services is reasonable (but not necessarily the lowest). Conducting a plan fee benchmarking exercise on an annual basis is generally considered to be prudent. Your plan advisor can quarterback these exercises to help ensure your plan is cost-effective given the services used.

Q: Are you aware of any new topical focus areas for financial wellness?
A. The Institutional Retirement Income Council’s annual forecast of key retirement industry trends for 2025 anticipates more robust preretiree education and planning programs. The organization suggests that preretiree modules will comprise personalized planning tools for retirement income projections (including integrating nondefined-contribution plan retirement income sources); education about Social Security and Medicare; and budgeting and tax planning for life after retirement — as well as opportunities to accumulate additional savings before retirement. The preretiree programs will likely be offered to employees at earlier ages (age 50+), so the employee has significant time to plan and act before retirement.

Q: We are planning to promote health savings accounts to our employees as a means of funding future healthcare expenses in retirement. Is there any data around use of these accounts as a long-term savings vehicle?
A: Given the triple tax-free status of health savings accounts, it’s a great idea to promote their potential for growth over the long term to help pay for healthcare expenses in retirement — including Medicare premiums. According to Bank of America’s Q3 2024 Participant Pulse, just 14% of health savings account holders invest for growth. To help you with targeting your campaign, 19% of men invest for growth (versus 13% of women). In addition, Baby Boomers (17%) invest in health savings accounts for growth more than any other generation.

2024, April, Defined Contribution DC Trends Survey  https://www.callan.com/blog-archive/2024-dc-survey/

2024, December, What The Crystal Ball Says for 2025 Retirement Industry Trends https://www.napa-net.org/news/2024/12/what-the-crystal-ball-says-for-2025-retirement-industry-trends/

2024, October, Participant Pulse https://business.bofa.com/content/dam/flagship/workplace-benefits/participant-pulse/Q3-Participant-Pulse.pdf

For plan sponsor use only, not for use with participants or the general public. This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or tax advisor for guidance on your specific situation.

Kmotion, Inc., 12336 SE Scherrer Street, Happy Valley, OR 97086; www.kmotion.com

©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.