Why Regular 401(k) Benchmarking Matters for Your Company

Just like a well-built home needs regular inspections to stay sturdy, a 401(k) plan requires ongoing attention to make sure it continues to serve employees well. Even when nothing looks “wrong,” unseen issues can quietly develop—higher-than-necessary fees, outdated investments, or declining engagement. Regular benchmarking helps keep your plan healthy, compliant, and aligned with participant needs.

Understanding What Benchmarking Really Is

Benchmarking means comparing your plan’s fees, features, investment lineup, and participant outcomes with industry standards. It’s a pulse check that reveals whether your plan is performing as well as it should or if adjustments could improve long‑term results.

Why Fees Need Consistent Oversight

Fees that seem minor today can significantly erode participant balances over decades. For example, reducing fees from 1.5% to 0.1% can translate into hundreds of thousands in additional retirement savings. Benchmarking helps identify unnecessary costs before they quietly compound.

Unchecked fees are one of the most common hidden risks in employer retirement plans. One study found that 84% of U.S. plans had at least one infraction or fiduciary concern—often tied to infrequent oversight.

Evaluating Investment Performance and Exploring Better Options

Regular reviews assess whether the current investment lineup is meeting expectations. If certain funds lag behind peers or no longer fit participants’ needs, benchmarking opens the door to stronger alternatives that can boost long‑term outcomes.

Monitoring Participant Engagement and Readiness

Strong plans don’t just offer good investments—they actively support employee retirement readiness. Benchmarking tracks participation rates, deferrals, and engagement metrics to reveal opportunities for improvement, such as adding Roth options, auto‑enrollment, or escalation features. One employer saw enrollment climb to 98% after adopting benchmarking‑driven enhancements.

Strengthening Fiduciary Compliance

As fiduciary lawsuits rise, documenting a prudent process is more important than ever. Benchmarking provides a clear audit trail that demonstrates due diligence and reinforces fiduciary defensibility under ERISA standards.

Industry Shift Toward Annual Reviews

Where companies once reviewed their plans every three years, the norm is now annual benchmarking. This change reflects increased market volatility, evolving regulations, and the need to stay ahead of potential liabilities.

Supporting Smarter Long-Term Plan Management

Benchmarking helps employers identify when it’s the right time to run a full request for proposal (RFP)—and when it isn’t. By reviewing data annually, companies can avoid unnecessary RFPs while still ensuring their plan remains competitive.

The Bigger Picture: Talent and Business Health

A strong, cost‑effective retirement plan supports recruitment, retention, and overall workforce wellness. Underperforming plans can contribute to delayed retirements, which cost employers an additional $50,000 per year per employee due to higher healthcare expenses and reduced productivity.

When plans stay aligned with employees’ needs and market standards, the entire organization benefits.

Regular 401(k) benchmarking isn’t about finding problems—it’s about staying ahead of them. With proactive annual reviews, companies can protect employees’ futures, control costs, and maintain peace of mind. If you’re unsure where your plan stands today, seeking expert guidance is a smart first step toward long‑term stability and stronger outcomes for your workforce.