As a plan sponsor—whether you’re a business owner, HR leader or named fiduciary—you’re tasked with delivering a retirement benefit that meets ERISA’s rigorous standards, supports participant goals and keeps costs under control. Navigating fiduciary duties, nondiscrimination testing and a backlog of administrative tasks can stretch any team thin. A comprehensive retirement plan is more than just a fund lineup. It’s a cohesive strategy that:
- Attracts and retains top talent
- Unlocks tax advantages and budget predictability
- Reduces sponsor liability through clear governance
- Streamlines processes for greater efficiency
This playbook offers a practical, step-by-step framework: defining your objectives, selecting the right plan type, establishing fiduciary governance, vetting service partners, designing plan features, completing legal and document requirements, launching with participant-focused communication and maintaining ongoing compliance and performance reviews. Alongside each step, you’ll find actionable checklists, best practices and links to key regulatory resources. Read on to discover how to build a comprehensive retirement plan that aligns with your organization’s goals and safeguards your fiduciary responsibilities.
Step 1: Evaluate Your Organization’s Retirement Plan Objectives
To lay a solid foundation, your first move is to align your retirement plan design with overarching business goals—whether that’s luring skilled talent, keeping high performers engaged, or managing benefit costs. Start by tapping into your HR and payroll data to paint a clear picture of your workforce. Break out participants by age bracket, tenure ranges and salary bands. Surveys or focus groups can also reveal what employees value most in a retirement benefit.
With a firm grasp of demographics and business priorities, you can set measurable objectives. Below is a starter checklist to guide your discussions:
- Desired participation rate (e.g., 75% or higher enrollment)
- Target average deferral rate (e.g., 6%+ of salary)
- Budgeted employer outlay for matching or profit-sharing contributions
- Preferred vesting speed to balance retention and cost
- Regulatory compliance thresholds (e.g., non-discrimination testing outcomes)
Having these targets in place helps you compare plan types and features later on. Here’s an example of how you might map different employee segments to specific plan goals:
| Workforce Segment | Key Characteristics | Participation Goal | Deferral Target | Employer Contribution Budget |
|---|---|---|---|---|
| Early-career (20–30) | Lower salaries, high growth | 65% | 4% | 1.5% match |
| Mid-career (31–50) | Peak earning years, loan demand | 85% | 6% | 3% match |
| Late-career (51–65) | Retirement near, risk-averse | 90% | 8% | 4% match + profit-sharing |
Define Your Fiduciary and Compliance Requirements
ERISA’s fiduciary mandate demands you act with prudence, loyalty and diversification in plan management. Key roles include:
- ERISA Section 402(a) Named Fiduciary: final authority over plan decisions
- 3(16) Plan Administrator: handles day-to-day plan operations and filings
- 3(38) Investment Manager: selects and monitors the investment lineup
Documenting these roles in your plan governance structure and formally delegating responsibilities helps reduce personal liability and ensures every duty falls to the right party. For a deeper dive into fiduciary services, see Summit’s fiduciary overview.
Establish Key Success Metrics
Clear metrics let you track whether your plan is hitting its stride. Consider both quantitative and qualitative measures:
Quantitative KPIs:
- Participation rate vs. target
- Average employee deferral rate
- Fund performance compared to benchmarks
- Total plan cost per participant
Qualitative KPIs:
- Employee satisfaction with plan education and tools
- Understanding of investment options (survey results)
- Feedback on enrollment experience
A simple mock dashboard might look like this:
| Metric | Target | Current | Status |
|---|---|---|---|
| Participation Rate | 75% | 68% | ⚠️ |
| Average Deferral Rate | 6% | 5.2% | ⚠️ |
| Fund Performance (1-yr vs. BM) | ≥ benchmark | +1.3% vs. 1% | ✅ |
| Plan Cost per Participant | ≤ $350 | $325 | ✅ |
| Employee Satisfaction Score | ≥ 80% | 74% | ⚠️ |
Tracking these metrics on a regular cadence—monthly for operations, quarterly for investments—lets you spot gaps early and adjust strategies before small issues become compliance headaches.
Step 2: Select the Appropriate Retirement Plan Type
Every organization has its own mix of budget constraints, staffing resources and growth plans. Selecting the right retirement plan vehicle means balancing your workforce’s needs—such as employee tenure and salary levels—with your capacity to handle administration and compliance. Here’s a quick look at the major plan types:
| Plan Type | Eligibility | Employer Contributions | Employee Deferral Limits (2024) | Admin Complexity |
|---|---|---|---|---|
| Traditional 401(k) | Broad (age 21, 1-year service) | Optional match or profit sharing | $23,000; $7,500 catch-up; $69,000 total | High |
| Roth 401(k) | Broad (same as Traditional) | Same as Traditional 401(k) | Same as Traditional 401(k) | High |
| Safe Harbor 401(k) | Broad (no service requirement) | Mandatory match or non-elective contrib. | Same as Traditional 401(k) | Medium |
| SIMPLE IRA/401(k) | ≤ 100 employees | 2% nonelective or 100% up to 3% match | $16,000; $3,500 catch-up; no total cap | Low |
| SEP IRA | Any size, self-employed & small biz | Employer contributions only (max 25% compensation) | $66,000 employer-only limit | Low |
| Profit-Sharing | Broad | Discretionary up to IRS limits | Combined with 401(k) employee deferrals | Medium |
| Defined Benefit | Broad, high-income sponsors | Actuarially determined | N/A (pension benefit formula) | Very High |
To narrow your choices, consider:
- Your headcount and projected growth
- Consistency of cash flow (profit-sharing vs. fixed match)
- Internal bandwidth for testing and filings
- How retirement benefits fit into your total rewards package
No matter which vehicle you lean toward, the IRS offers a handy overview of plan options to guide your initial research.
Analyze 401(k) Plan Variations
The 401(k) remains the workhorse of employer-sponsored plans, but it comes in several flavors:
- Traditional vs. Roth: Contributions to a Traditional 401(k) reduce current taxable income, while Roth deferrals grow tax-free.
- Safe Harbor: By promising a minimum employer match or non-elective contribution, you sidestep nondiscrimination testing—ideal if you anticipate high HCE participation.
- SIMPLE 401(k): A streamlined 401(k) for employers with up to 100 employees, combining easy setup with mandatory employer contributions.
Employee deferral limits for 2024 stand at $23,000 with an additional $7,500 catch-up for those 50 and older. Total contributions (employee + employer) are capped at $69,000 (or $76,500 with catch-up). For a deeper dive into features and compliance, visit our 401(k) fundamentals page.
Evaluate Plans for Small Businesses
Organizations under 100 employees often gravitate toward SIMPLE IRAs or SIMPLE 401(k)s because of their low setup costs and minimal testing obligations. Key distinctions:
- SIMPLE IRA: Employer must either match up to 3% of compensation or make a 2% nonelective contribution for all eligible participants.
- SIMPLE 401(k): Functions like a standard 401(k) but retains the same contribution and match rules as the SIMPLE IRA.
By contrast, a Safe Harbor 401(k) requires a 3% match (or 2% nonelective) but delivers broader deferral limits and quicker vesting. For many 25-employee companies, the incremental admin work of Safe Harbor pays off in higher participation and reduced testing headaches. Learn more about small-business plan design on our dedicated guide.
Step 3: Establish Rigorous Fiduciary Governance
A solid governance framework protects both your plan participants and your organization. Start by creating a fiduciary oversight committee or designating individual fiduciaries. Document their roles in a formal governance policy that includes:
- A committee charter or board resolution defining scope (investment oversight, vendor selection, compliance reviews)
- Authority and decision-making protocols
- Meeting cadence—typically quarterly to align with investment performance reports
- Procedures for maintaining and approving meeting minutes
Embedding these elements in a written policy demonstrates the prudence and process required under ERISA. Be sure to keep the following ERISA-required documents readily accessible:
- Investment Policy Statement (IPS) outlining objectives, risk tolerance and review schedule
- Committee meeting minutes detailing attendance, discussions and action items
- Delegation or service agreements for any outsourced functions
- Evidence of fiduciary liability coverage for all committee members and service providers
These records form the backbone of your defense in the event of a Department of Labor inquiry or participant complaint.
Delegate Administrative and Investment Fiduciary Duties
Leveraging specialist providers lets you focus on high-level oversight while shifting routine tasks to experts. For example:
- A 3(16) TPA like Summit Consulting Group, LLC handles daily operations—participant transactions, nondiscrimination testing, Form 5500 filings and compliance support.
- A 3(38) investment manager takes charge of fund selection, monitoring, benchmarking and rebalancing in accordance with your IPS.
Best practices for delegation:
- Execute detailed, written service agreements specifying responsibilities, performance metrics and termination clauses
- Verify that each provider carries ERISA fiduciary liability insurance
- Keep all delegation agreements, service certificates and fee schedules in your plan records for audit readiness
Clear, documented delegation not only reduces the risk of overlooked tasks, but also limits the scope of your personal liability.
Implement Fiduciary Training and Monitoring
ERISA is dynamic—regulatory guidance, DOL opinions and case law evolve. Your fiduciaries should complete ERISA-focused training at least annually. Consider:
- Department of Labor webinars on prohibited transactions and disclosure requirements
- Industry seminars hosted by recordkeepers, TPAs or professional associations
- In-house workshops reviewing your IPS, fee benchmarking results and compliance calendar
A master compliance calendar ensures nothing slips through the cracks. At a minimum, track:
- Annual Form 5500 and Summary Annual Report deadlines
- Fidelity bond renewal dates
- IPS review and committee meeting dates
- Participant disclosure distribution windows (e.g., 404(a)(5) fee notices)
Proactive training and vigilant monitoring transform governance from a box-checking exercise into a living process that upholds fiduciary duties and safeguards your plan’s integrity.
Step 4: Choose and Evaluate Plan Providers and Service Partners
Selecting the right mix of recordkeepers, custodians, TPAs and advisors can make or break your plan’s success. As you compare potential partners, consider:
- Service scope
- Participant transaction processing (enrollments, loans, distributions)
- Compliance support (nondiscrimination testing, Form 5500 filings)
- Reporting and fiduciary documentation
- Technology and user experience
- Online portals for sponsors and participants
- Mobile access and account aggregation tools
- Data security certifications (e.g., SOC 1, SOC 2)
- Scalability and integration
- Ability to grow with your headcount and asset levels
- API or data-connectivity with payroll and HR systems
- Turnkey integration with your existing custodial or recordkeeping platform
- Client support and education
- Dedicated service teams and escalation procedures
- Financial-wellness tools and webinars for participants
- Customizable communication materials
Fee structures vary widely, so benchmark proposals across three common models:
- Flat administrative fee (monthly or annual)
- Per-participant fee (fixed rate per employee)
- Asset-based fee (percentage of plan assets)
Use this simplified RFP template to get started:
- Service Scope and Responsibilities
- Which administrative tasks are included (loan servicing, testing, filings)?
- What’s the process for plan amendments or ad hoc compliance requests?
- Implementation and Onboarding
- What is the typical timeline from engagement to live date?
- Can you provide a sample project plan and dedicated implementation lead?
- Technology and Reporting
- Do you offer a sponsor portal with real-time dashboards?
- Are participant statements customizable and compliant with 404(a)(5)?
- Fee Disclosure and Benchmarking
- Please detail all fees (administrative, investment, bundled/unbundled).
- How frequently do you benchmark fees against industry standards?
- Client References
- Can you provide three references from plans of similar size and design?
- May we see examples of your quarterly performance and service reports?
Compare Provider Proposals Side by Side
A side-by-side matrix helps you spot strengths and gaps at a glance:
| Criteria | Provider A | Provider B | Provider C |
|---|---|---|---|
| Flat Admin Fee | $5,000 annually | $450/mo | $0 |
| Per-Participant Fee | $40/yr | $50/yr | $35/yr |
| Asset-Based Fee | 0.10% of assets | 0.07% | 0.12% |
| Service Offering | Full TPA + recordkeeping | Recordkeeping only | TPA, compliance support |
| Tech Capabilities | Modern APIs, mobile app | Basic portal | Custom dashboards |
| Client Support | 24/5 phone/email | 9–5 email only | 24/7 chat + phone |
| Client References | 5 plans (10–500 EE) | 3 plans (500+ EE) | 4 plans (50–200 EE) |
Actionable Tip: Always request a live portal demonstration and a sample participant statement—seeing the interface and communication in action reveals user experience gaps that aren’t obvious on paper.
Identifying a Strong Contender: Summit Consulting Group, LLC
Summit Consulting Group, LLC stands out as a full-scope TPA and independent fiduciary partner. Their track record speaks volumes:
- 98% reduction in sponsor fiduciary liability through clear delegation and documentation
- 99% of plan operations—testing, filings, recordkeeping—handled by their team
- 32%–65% savings in plan administration and investment fees compared to industry averages
Discover how Summit can streamline your retirement plan in their provider overview.
Step 5: Design Plan Features and Contribution Strategies
With your plan vehicle selected, it’s time to fine-tune the mechanics that drive participation, savings and budget predictability. Thoughtful design features—like automatic enrollment, targeted matching formulas and profit-sharing options—encourage higher deferrals, simplify employee decisions and give you better control over employer contributions.
Auto-Enrollment and Auto-Escalation
Automatically enrolling new hires at a default deferral rate (for example, 3% of pay) and then increasing that rate annually (e.g., +1% per year up to 6%) consistently lifts participation and savings. Auto-enrollment tackles inertia—employees who might never sign up get started by default—while auto-escalation addresses the all-too-common habit of sticking with a low deferral rate.
However, plan documents must clearly communicate opt-out rights. Typical parameters:
• Initial deferral: 3% of salary
• Annual escalation: +1% (capped at 6–8%)
• Employee can opt out or change rate at any time
Matching Formulas and Profit-Sharing
Matching contributions reward employee savings and reinforce the value of the plan. Common approaches:
• 100% match on the first 3% of deferrals
• 50% match on the next 2% of deferrals
• Discretionary profit-sharing contribution (e.g., 3% of payroll allocated based on compensation)
By combining a fixed match with profit-sharing, you balance predictability and flexibility. Profit sharing lets you tie contributions to company performance; a down year can mean lower employer cost.
Example Calculations
Assume an employee earns $60,000 and contributes 5% of pay ($3,000):
- 100% match on first 3%:
0.03 × $60,000 = $1,800 - 50% match on next 2%:
0.02 × $60,000 × 0.50 = $600
Total employer match = $2,400
If you add a 3% discretionary profit share:
0.03 × $60,000 = $1,800
Combined employer outlay for this participant:
$2,400 + $1,800 = $4,200
Feature Comparison
| Feature | Benefit | Consideration |
|---|---|---|
| Auto-Enrollment | Higher participation | Must communicate opt-out rights clearly |
| Auto-Escalation | Gradual savings increase | Employees may need reminders |
| 100% up to 3% match | Strong incentive to save | Higher predictable employer cost |
| 50% on next 2% match | Lowers incremental match expense | May be less motivating past 3% |
| Discretionary Profit-Sharing | Links cost to performance | Budget planning must account for variability |
Structure Vesting and Eligibility Schedules
Eligibility and vesting rules influence both employee behavior and your long-term costs:
• Eligibility criteria often require participants to be age 21 with one year of service (or two years under ESOP rules).
• Vesting schedules:
– Cliff vesting: 100% after three years of service. Strong retention tool but delays employee ownership.
– Graded vesting: e.g., 20% per year over six years. More gradual ownership, lower upfront liability.
Align your vesting design with your retention goals: a shorter cliff or quicker grading can reinforce loyalty among high-turnover groups.
Forecast Employer Cost and Cash Flow
Projecting your contributions over a multi-year horizon keeps your budget aligned with plan design changes (like auto-escalation). A simple five-year template might look like:
| Year | Avg. Covered Payroll | Match Rate | Match Cost | Profit-Share Rate | Profit Cost | Total Employer Cost |
|---|---|---|---|---|---|---|
| 1 | $5,000,000 | 3.0% | $150,000 | 3.0% | $150,000 | $300,000 |
| 2 | $5,150,000 | 3.5% | $180,250 | 3.0% | $154,500 | $334,750 |
| 3 | $5,304,500 | 4.0% | $212,180 | 3.0% | $159,135 | $371,315 |
| 4 | $5,463,635 | 4.5% | $245,863 | 3.0% | $163,909 | $409,772 |
| 5 | $5,627,544 | 5.0% | $281,377 | 3.0% | $168,826 | $450,203 |
Assumptions:
- Payroll growth: 3% annually
- Auto-escalation of match rate: +0.5% per year until 5%
- Profit-sharing fixed at 3%
Sensitivity analysis: a 1% increase in profit-share rate adds roughly $56,000 to Year 1 cost; a 1% change in payroll growth compounds significantly over five years. Adjust your model to test upside and downside scenarios, and build contingency buffers into your operating budget.
Step 6: Implement Plan Documents and Legal Setup
With your plan design locked in, the next critical phase is drafting and finalizing the legal documents that govern the plan and satisfy ERISA and IRS requirements. Properly executed plan documents not only ensure compliance but also provide transparency for participants and fiduciaries alike.
Begin by assembling the core plan documents:
- Plan Document (prototype or individually designed)
- Adoption Agreement (for prototype plans) or custom Plan Document amendments
- Summary Plan Description (SPD)
- Trust Agreement (establishing how plan assets are held)
- Investment Policy Statement (if not already finalized in Step 3)
When choosing between a prototype and an individually designed document:
- Prototype Plans
- Pre-approved by the IRS, faster setup and lower drafting costs
- Limited flexibility for unique plan features
- Individually Designed Documents
- Fully customized language to match your plan design
- Greater drafting time and higher legal fees, but no “one-size-fits-all” constraints
Once drafted, your legal team or TPA should prepare an IRS determination letter application—confirming that plan language meets IRS qualification rules—and file any required Department of Labor Notices (e.g., Blackout Notice if changing recordkeepers).
To keep the process on track, use a timeline checklist:
| Task | Responsible Party | Target Date |
|---|---|---|
| Draft Plan Document & Adoption Agreement | Plan Counsel / TPA | Month 1 |
| Review & Revise Document Language | Sponsor / Counsel | Month 2 |
| Obtain IRS Determination Letter (if desired) | Sponsor / Counsel | Month 3 |
| Finalize Trust & IPS | Sponsor / TPA | Month 3 |
| Prepare and Deliver Participant Disclosures | TPA / HR | Month 4 |
| File Form 5500 (following plan year-end) | TPA | By July 31 |
Prepare and Distribute Participant Disclosures
ERISA mandates clear, timely communication to plan participants. Two key disclosures are:
- Summary Plan Description (SPD)
- Explains eligibility, benefits, claims procedures and fiduciary rights
- Must be provided within 90 days of plan effective date (or 120 days for new participants)
- 404(a)(5) Fee Disclosures
- Itemizes administrative and investment fees in charts or tables
- Delivered electronically or in paper form at least once every 12 months, and upon enrollment
Best practices:
- Use plain-language summaries and visual fee tables
- Coordinate with your recordkeeper for electronic delivery platforms
- Track delivery dates in your compliance calendar to avoid missed deadlines
File Necessary Regulatory Forms
Ongoing compliance hinges on timely filings:
- Form 5500 / 5500-SF
- Annual return/report capturing plan financials, operations, and compliance testing
- Standard due date: July 31 (automatic extension to October 15 with Form 5558)
- Summary Annual Report (SAR)
- A plain-language synopsis of Form 5500 results
- Must be sent to participants within nine months after plan year-end or two months after Form 5500 extension
Example calendar entry:
| Date | Filing / Disclosure | Notes |
|---|---|---|
| July 31 | Form 5500 return | Request extension (Form 5558) by 7/31 |
| Sept 30 | Extension deadline | File Form 5500 with 5558 extension |
| Oct 31 | SAR distribution | Send via mail or secure electronic portal |
Maintain your compliance calendar alongside meeting minutes and document versions. This integrated record-keeping demonstrates due diligence and positions you for a smooth DOL audit or participant inquiry. Once these legal and disclosure steps are complete, you’re ready to launch the plan to employees in Step 7.
Step 7: Launch Your Retirement Plan and Communicate Effectively
A successful plan launch hinges on clear, coordinated communication. Even the most thoughtfully designed plan will underperform if employees aren’t aware of its features or benefits. By crafting a multi-channel rollout and keeping messages jargon-free, you’ll turn a complex benefit into a compelling personal opportunity—driving enrollment, deferral elections and long-term engagement.
Start your rollout with a “save the date” or teaser message 4–6 weeks before your launch. Follow up with a formal announcement outlining key dates, how to enroll and where to find resources. In the days leading up to the official launch, send reminders via email, intranet banners or printed flyers in break rooms. After the plan goes live, continue to reinforce the message with periodic reminders and highlights of specific features (auto-escalation, matching formulas, etc.).
Here’s a sample launch timeline to get you started:
- 6 weeks out: Pre-announcement (“New retirement plan coming soon”)
- 4 weeks out: Official launch invitation with enrollment details
- 2 weeks out: Reminder email and flyer distribution
- Launch week: Live kickoff event (see next section)
- 1 month post-launch: Progress update (“X% of employees already enrolled”)
- Ongoing: Quarterly plan feature spotlights and enrollment refreshers
Conduct Employee Enrollment Meetings
In-person and virtual enrollment meetings give participants a forum to ask questions and make informed decisions. To maximize attendance and engagement:
- Offer multiple sessions (day, evening, virtual) to fit varying schedules
- Provide an agenda in advance so attendees come prepared
- Use simple visuals—flowcharts for enrollment steps, charts for match formulas
- Include plenty of Q&A time and have enrollment forms or online links on hand
Sample Meeting Agenda:
- Welcome and plan overview
- How auto-enrollment and auto-escalation work
- Matching and profit-sharing explained with examples
- Live demo of the enrollment portal
- Q&A and one-on-one assistance stations
Encourage managers to attend alongside their teams. Peer support and leadership endorsement often tip the balance for employees who are on the fence.
Provide Ongoing Financial Education Resources
A plan launch is just the beginning. Continuing education keeps retirement top of mind and helps participants make smarter choices:
• Budgeting basics: showing how a 1% deferral increase translates to real dollars
• Goal setting: defining retirement milestones and tracking progress
• Investment fundamentals: explaining risk, diversification and your lineup options
• Plan tools: walkthroughs of online calculators, mobile apps and statement features
Mix formats to suit different learning styles:
- Interactive workshops with guest speakers
- Live or recorded webinars for remote teams
- Self-paced online courses or micro-learning modules
- One-on-one coaching sessions or office hours
By layering these elements—interactive meetings, clear messaging and continuous education—you’ll transform plan launch into sustained participation and build a culture where saving for tomorrow becomes second nature today.
Step 8: Manage Plan Operations and Ensure Compliance
Running a retirement plan requires more than a “set it and forget it” mindset. Day-to-day operations must be handled efficiently, while periodic compliance testing keeps ERISA requirements in check. A disciplined approach—backed by calendar reminders and correction strategies—helps you steer clear of costly errors and demonstrates fiduciary prudence.
Begin by mapping out your core administrative tasks:
- Processing employee and employer contributions, including payroll integrations and catch-up deferrals
- Administering participant loans, repayments and tracking outstanding balances
- Managing hardship withdrawals and distribution requests, ensuring eligibility and proper documentation
- Updating employee data—service, compensation and status changes—to maintain accurate census files
Alongside routine operations, your plan must clear a series of compliance tests each year:
- ADP/ACP Testing (Average Deferral Percentage/Average Contribution Percentage)
- Top-Heavy Testing (ensuring key employees don’t disproportionately benefit)
- Coverage Testing (general eligibility and participation requirements)
A simple testing calendar can help you monitor deadlines and correction windows:
| Compliance Test | Frequency | Typical Deadline | Common Correction |
|---|---|---|---|
| ADP/ACP Testing | Annual | Plan year-end* | Make-up contributions or HCE refunds |
| Top-Heavy Testing | Annual | Plan year-end* | Minimum contributions to NHCEs |
| Coverage Testing | Annual | Form 5500 filing** | Adjust future contribution allocations |
*Often run after census data is finalized; **Form 5500 due July 31 (extension to October 15 with Form 5558).
When a test fails or an administrative error emerges, having documented correction strategies in place is crucial. The Department of Labor’s Voluntary Fiduciary Correction Program (VFCP) offers a pathway for self-correcting certain ERISA violations—minimizing sponsor liability and avoiding more severe enforcement actions.
Leverage Correction Programs for Breaches
The VFCP enables sponsors to proactively fix common errors—missed participant loans, late remittance of contributions or incorrect eligibility determinations—without waiting for an audit. To participate:
- Identify the eligible error (refer to VFCP’s list of correctable items).
- Restore the plan to its rightful position, including any lost earnings.
- Submit a VFCP application with supporting documents and a corrective action plan.
- Receive a written compliance statement from EBSA upon approval.
For full details on eligible transactions and application steps, visit the DOL’s VFCP page: https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/correction-programs/vfcp
Automate and Streamline Administrative Tasks
Manual processes increase the risk of missed deadlines and data-entry errors. Modern tools can accelerate operations and bolster audit readiness:
- Automated data feeds from payroll and HR systems to keep census data current
- E-signature platforms for secure, trackable enrollment forms and participant disclosures
- Compliance-alert software that flags testing deadlines, disclosure windows and bond renewals
These investments reduce administrative headcount needs, cut error rates and deliver a clear audit trail—so you can demonstrate due diligence in your fiduciary role and spend more time on strategic oversight.
Step 9: Oversee Investment Management and Performance Reviews
A rock-solid Investment Policy Statement (IPS) lays the groundwork for consistent, defensible investment decisions. At its core, an IPS should clearly state the plan’s objectives—whether that’s steady growth, capital preservation or a blend of both—along with risk tolerances, allowable asset classes and criteria for evaluating fund performance. Codifying these elements in writing ensures every fund choice aligns with participant needs and meets fiduciary obligations.
With an IPS in hand, you can build a fund lineup that fits your plan’s unique profile. Target-date funds offer a one-stop solution, automatically shifting asset allocations as participants age—ideal if you have a broad employee base with varying retirement horizons. Alternatively, a custom lineup lets your committee handpick a mix of equities, fixed-income and specialty funds, giving you finer control over risk and cost. Either approach should be revisited on a regular cadence (at least quarterly for performance and fee reviews, with an annual deep dive).
Monitor Fees and Benchmark Against Peers
Keeping fees in check is as important as chasing returns. Start by tracking:
- Weighted average expense ratio of the fund lineup
- Total plan cost per participant (administrative + investment fees)
- Investment management fees as a percentage of plan assets
A simple benchmarking report might look like this:
| Metric | Target | Current | Status |
|---|---|---|---|
| Weighted Expense Ratio | ≤ 0.40% | 0.45% | ⚠️ |
| Total Cost per Participant | ≤ $350 | $330 | ✅ |
| Investment Fee as % of Assets | ≤ 0.15% | 0.18% | ⚠️ |
| Peer Group Return (3-yr avg) | ≥ 6.5% | 7.2% | ✅ |
Compare these figures against industry benchmarks or third-party survey data. A slight uptick in fees or a dip in returns might signal it’s time to renegotiate pricing or revamp the lineup.
Address Underperforming Funds and Rebalance
Not every fund will hit a home run, and some will lag their benchmarks or peers. Establish clear criteria for fund removal, such as:
- Underperformance against benchmark for three consecutive review periods
- Expense ratios materially above peer group averages
- Manager tenure shorter than your minimum threshold (e.g., one year)
When a fund fails to meet your IPS criteria, follow a documented process:
- Committee review and vote to terminate or replace the fund
- Selection of a suitable replacement that meets IPS guidelines
- Update the lineup and communicate changes to participants, highlighting how the new fund supports plan objectives
- Monitor the transition’s impact to ensure smooth execution and minimal disruption
Regular rebalancing—driven by your IPS guidelines—also keeps portfolios aligned with target allocations. By trimming overweight positions and topping up underweight areas, you manage risk and preserve long-term growth potential. Clear documentation of each decision ensures transparency and protects fiduciaries when questions arise.
Step 10: Review, Refine, and Evolve the Retirement Plan
Even the best-designed retirement plan needs regular checkups. Set an annual rhythm for reviewing core metrics—participation rates, average deferral, vesting progress, loan and distribution usage, and leakage (hardship withdrawals or rollouts). These “health checks” spotlight trends early, so you can tweak plan features or communication strategies before small issues become entrenched problems.
Employee feedback is equally vital. Short surveys or focus groups can reveal whether participants understand auto-escalation, feel confident choosing investments, or need more support around loans and withdrawals. Use this input to refine educational programs, adjust default settings, or broaden your retirement-education calendar. Over time, small improvements accumulate into a more engaging, user-friendly plan that drives higher savings and satisfaction.
Longer-term evolution means mapping out a multi-year enhancement roadmap. You might add a Roth option for after-tax savings, fine-tune auto-escalation caps, or introduce new plan features like student-loan matching. By tying these enhancements to your organization’s strategic goals—workforce growth, succession planning, or new legislative opportunities—you ensure your retirement benefit stays competitive and fiscally sustainable.
Benchmark Plan Competitiveness
Benchmarking helps you see how your plan stacks up against peers. Leverage industry surveys, benchmarking tools, and third-party reports to compare costs, features, and performance. A simple snapshot might look like this:
| Key Metric | Your Plan | Industry Average | Status |
|---|---|---|---|
| Participation Rate | 78% | 72% | ✅ Ahead |
| Average Employee Deferral Rate | 6.4% | 6.0% | ✅ Ahead |
| Weighted Average Expense Ratio | 0.42% | 0.40% | ⚠️ Review |
| Total Cost per Participant | $340 | $360 | ✅ Ahead |
| 3-Year Net Investment Return (Avg) | 7.1% | 6.8% | ✅ Ahead |
This dashboard highlights where you excel and where there’s room to optimize. For any metric below benchmark, identify root causes—higher fees, underperforming funds, or communication gaps—and build targeted action plans.
Plan for Future Changes and Growth
Your organization won’t stand still—and neither should your retirement plan. Anticipate key business events and external shifts with a change-management checklist:
- Merger or Acquisition:
- Assess legacy plan designs and integration requirements
- Coordinate communication and enrollment around go-live dates
- Workforce Expansion or Reduction:
- Revisit eligibility and vesting schedules to match talent strategies
- Scale service provider fees and technology for changing headcounts
- Legislative Updates (e.g., SECURE Act provisions):
- Review new features like Pooled Employer Plans or lifetime income disclosures
- Update plan documents, SPDs, and participant notices accordingly
- Technological Enhancements:
- Evaluate new portals, mobile apps, or robo-advisory tools
- Pilot test with a small group before full deployment
By maintaining a proactive stance—rather than reacting to surprises—you safeguard your plan’s integrity and keep participants confident in their path to retirement.
With these ten steps, you’ve built more than a compliance-driven benefit; you’ve created a dynamic, living retirement plan that adapts to your people, your business, and the regulatory landscape. The cycle of review, refinement, and evolution ensures your plan remains a powerful tool for talent attraction, cost management, and fiduciary peace of mind.
Your Next Steps
Building a truly comprehensive retirement plan is less a one-time project and more a continuous journey. Now that you’ve mapped out objectives, chosen the right plan design, established governance protocols and lined up service partners, it’s time to turn theory into action—and keep it moving forward. Start by locking in your key success metrics and scheduling regular check-ins (for example, quarterly investment reviews and an annual plan health assessment). Solicit employee feedback, compare your performance against industry benchmarks and adjust features—like auto-escalation caps or matching formulas—based on real-world results.
Maintain momentum with a living compliance calendar. Populate it with Form 5500 deadlines, fiduciary training dates, blackout notice periods and other critical milestones. Automate reminders where you can and assign clear ownership for each task. This disciplined approach reduces your exposure to ERISA missteps and frees you up to focus on strategic enhancements—think adding a Roth option, piloting financial-wellness workshops or exploring lifetime-income solutions.
The payoff? You’ll protect your organization from undue fiduciary risk, keep plan costs in check and cultivate a retirement benefit that employees actually use and appreciate. High participation and steady deferrals translate into better financial outcomes for your team—and they reinforce your reputation as an employer that genuinely invests in people’s futures.
Ready to keep the cycle of goal-setting, implementation and refinement spinning? Visit Summit Consulting Group, LLC to learn how our independent fiduciary guidance and turnkey administration can help you optimize costs, streamline operations and elevate participant satisfaction. https://www.geauxsummit401k.com
