401(k) Account Login
Login Options
Spring is often associated with cleaning and organizing. For retirement plan fiduciaries, it can also be an ideal time to review the health of a company’s 401(k) plan. Just as individuals review their finances periodically, plan sponsors should regularly evaluate plan operations, investments, and participant engagement to ensure their retirement plan continues to meet fiduciary standards and support employees’ retirement readiness.
Taking time each year to “spring clean” a retirement plan can help identify potential issues early, improve participant outcomes, and demonstrate prudent fiduciary oversight. While every plan is different, several key areas deserve regular attention.
With this in mind, here are five tasks fiduciary plan sponsors should consider tackling this spring:
- Review the Plan’s Investment Lineup – Monitoring the plan’s investment options is one of the most important fiduciary responsibilities. Plan sponsors should periodically review the plan’s investment lineup to confirm that each investment on the plan menu remains appropriate for participants and continues to meet the criteria outlined in the plan’s Investment Policy Statement.
This review typically includes evaluating fund performance relative to benchmarks, examining expense ratios, and confirming that funds remain consistent with their stated investment objectives. If certain funds consistently underperform or no longer meet plan standards, fiduciaries may need to consider replacing them. Target-date funds should also be reviewed regularly, particularly if they serve as the plan’s default investment option.
- Evaluate Plan Fees and Service Providers – Fiduciaries must ensure that plan fees are reasonable in relation to the services provided. A periodic review of plan fees, including investment management fees, recordkeeping costs, and administrative expenses, can help determine whether the plan’s expenses remain competitive in the marketplace.
Spring can also be a good time to review service provider agreements, fee disclosures, and benchmarking reports. Documenting these reviews is also an important part of demonstrating prudent fiduciary oversight.
- Confirm Plan Compliance and Documentation – Retirement plans are subject to a range of regulatory requirements, making periodic compliance checks essential. Plan sponsors should review plan documents to ensure required amendments have been adopted and verify that plan operations align with the plan’s written provisions.
Fiduciaries should also confirm that required participant notices, such as fee disclosures or safe harbor notices, are being distributed properly and on time. Working with legal counsel, a third-party administrator, or other compliance specialists can help ensure the retirement plan remains up to date with evolving regulations.
- Assess Participant Engagement and Savings Behavior – Even well-designed retirement plans depend on participant behavior to achieve strong outcomes. Reviewing plan data, such as participation rates, contribution levels, and loan or hardship withdrawal activity, can help sponsors identify potential areas of concern.
If participation or contribution rates are lower than expected, plan sponsors may want to enhance communication strategies or offer additional financial education resources. Educational workshops, digital planning tools, and targeted messaging can help employees better understand the importance of saving for retirement. Some employers may also consider whether features like automatic enrollment or automatic contribution escalation could improve participation and long-term savings.
- Document Fiduciary Oversight – Finally, fiduciaries should ensure their oversight activities are well documented. Meeting minutes, investment reviews, fee analyses, and service provider evaluations all help demonstrate that fiduciaries are acting prudently and in the best interests of plan participants. Maintaining clear documentation supports a strong governance process and can help protect fiduciaries if questions about retirement plan oversight arise.
Keeping Retirement Plans on Track
Regularly reviewing and updating a retirement plan does more than satisfy regulatory requirements. It helps ensure the plan continues to serve employees effectively. By taking a proactive approach and tackling these five fiduciary tasks each spring, plan sponsors can strengthen their retirement programs and support better financial outcomes for participants. PCA is available to support you in any of these important Spring cleaning initiatives.