Why Your Business Should Stay Involved in Your 401(k) Plan
- May 20
- 2 min read
Offering a 401(k) plan is a powerful way to support your employees and stay competitive in today’s hiring market. But once your plan is in place, it’s important to remember, it’s not a “set it and forget it” benefit.
As the plan sponsor, you have a fiduciary responsibility under federal law to act in your employees’ best interest and ensure the plan is being properly managed. Even if a third-party administrator handles day-to-day tasks, overall oversight still falls on you.
As we approach the middle of the year, take time to review your plan and make sure everything is on track.
Key Areas to Revisit:
Investment Options
Take a look at the investment lineup available to your employees. A well-structured plan should offer a range of options that align with different ages, risk levels, and retirement goals.
If your plan uses a default investment such as a target-date fund, make sure it still fits your workforce. It’s also important to regularly evaluate how investments are selected and monitored, whether internally or with the help of an advisor.
Plan Fees
Fees can impact both your employees’ returns and your plan’s compliance standing. Review all costs, including investment management, administrative, and advisory fees.
Consider how these expenses are shared between your business and your employees, and compare them to similar plans to ensure they remain reasonable and competitive.
Service Providers
Even if your third-party administrator manages most of the plan operations, periodic oversight is essential. Make sure they are maintaining accurate records, filing required reports on time, and following strong data protection and cybersecurity practices.
A quick check can help you catch small issues before they become larger problems.
Compliance and Operations
Retirement plan rules evolve, and it’s important to confirm your plan remains aligned with current regulations. Review whether your plan’s day-to-day operations match what’s outlined in the official plan document especially when it comes to contributions, eligibility, vesting, and loans. Regular reviews can help uncover errors or inconsistencies early.
The Bottom Line
A well-managed 401(k) plan can strengthen your business, improve employee satisfaction, and demonstrate your commitment to your team’s future. But it requires ongoing attention to stay effective and compliant.
Taking time for an annual check-in with a trusted advisor can help you manage risk, control costs, and ensure your plan continues to deliver value for both your business and your employees.
Make a plan to review your 401(k) during the months of June and July to evaluate performance and make changes before it’s too late.
