Commercial Insights
Retirement plan benchmarking: Strengthening your company's 401(k)

Article 7 min read Published May 9, 2025

Is your company’s plan reaching its full potential and setting employees up for success?

Benchmarking your company’s retirement plan is similar to giving it a regular health checkup. This is your chance, as plan sponsor, to review and compare fees, investments, and plan features such as a company match against established industry averages, as well as evaluate how well it’s serving your participants.

This is meant to be a deep dive into the plan’s operational efficiency and how it compares to the offerings of similar companies. The Department of Labor recommends this thorough evaluation occur at least every three years. However, in light of recent lawsuits against plan fiduciaries and the evolving regulatory environment, adopting an annual benchmarking cadence is considered a best practice.

Prudent risk management

Implementing a formal benchmarking process for a 401(k) or other defined contribution plan isn’t merely about ticking a box. In reality, it’s a powerful tool to mitigate fiduciary risk. The idea is to identify areas of concern and make adjustments designed to create better outcomes for your employees.

“One of the core things we’re hearing from clients this year is, ‘What are the critical areas that demand our attention when it comes to plan design and the administration of our retirement benefits?’” says John Kibbe, Institutional Trust Business Development Officer. This underscores the proactive approach businesses are taking, recognizing the significant impact on employee satisfaction and financial well-being.

The retirement plan checkup checklist

When you’re evaluating your retirement program and seeking clarity on whether your current strategies are serving your employees’ best interests, you’ll want to examine your governance program. This includes a clear checklist of responsibilities and action items that plan fiduciaries should consistently adhere to throughout the year, ensuring diligent oversight. It will encompass things like the investment lineup, provider fees and service reviews, documentation and records management, and effective participant communications.

Plan fiduciaries have a responsibility to determine whether their plan fees are reasonable, as outlined in Employee Retirement Income Security Act (ERISA) Section 408. There are three core duties relating to this: 1) maintaining control and accounting for all investment-related fees and expenses, 2) transparently identifying every party compensated directly or indirectly from portfolio assets, and 3) proving that a thorough analysis showed fees were appropriate and reasonable in relation to the level and quality of the services rendered. Fiduciaries must provide plan participants with clear information about all plan-related fees, empowering them to make informed decisions about their financial future.

“We recommend focusing on what we call the core fiduciary processes or standards, making sure you clearly understand each and every fee associated with your retirement program,” Kibbe says. This emphasis on plan fees is reflected in Callan’s 2024 DC Trends Survey, showing that around two-thirds of plan sponsors say they were somewhat or very likely to conduct a formal fee study in the next year.¹ This indicates a growing awareness of the impact of fees on retirement savings.

Fee benchmarking pays off

A majority of the survey’s participants said they would review various fee types, including often-overlooked management account service fees and indirect revenue streams. Around half of the participants in the survey said they were likely to move toward lower cost investment vehicles, an increase from the 42% of participants who said the same the prior year.¹

Heightened vigilance around fees may be paying off for plan sponsors and participants alike, with nearly half of those surveyed saying they achieved a direct reduction in plan fees as a result of their benchmarking efforts.¹

“Beyond fees, another key area to focus benchmarking efforts on is what truly matters to participants in pursuing retirement outcomes,” Kibbe says. Determining how effectively your retirement plan is working for your employees is critical.

At Regions, we understand the complexities involved in the plan benchmarking process. We provide a comprehensive annual benchmarking study designed to inform and educate both plan sponsors and participants.