Key Insights from the 2025 401(k) Plan Management Benchmarking Report
Published on by Lauren Belieu in Benefit Plan Audits
As organizations compete in the ongoing war for talent, offering a competitive 401(k) plan has become a critical component of compensation packages. Our latest 401(k) Plan Management Benchmarking Report provides valuable insights into how companies are managing their plans and what trends are shaping retirement readiness. Understanding these benchmarks can help your organization evaluate whether your current plan structure positions you competitively in today’s market.
Who participated in the study?
- 147 companies across multiple industries, including manufacturing, construction, and non-profits.
- Roughly split 50/50 between companies with fewer than 100 participants and those with more.
This diverse representation ensures the findings reflect real-world challenges faced by organizations of all sizes. Small and mid-sized companies often face unique constraints in plan administration, while larger organizations may have more complex compliance requirements and varied participant needs.
Plan oversight
Strong governance remains a priority:
- Most companies conduct regular oversight committee reviews and maintain investment policy statements.
- Third-party administrator relationships are reviewed frequently.
- Compliance issues are monitored closely, reflecting heightened regulatory scrutiny.
The emphasis on governance reflects lessons learned from recent increases in Department of Labor enforcement actions. Companies that establish clear fiduciary processes and document their decision-making are in a stronger position. These practices help demonstrate prudent plan management and reduce the risk of potential liability.
Investments and contributions
- Investment choices: about half of respondents offer 10-20 options, while 49 companies provide more than 20.
- Employer contributions: safe harbor plans remain common, ensuring compliance and participant benefits.
- Participant bonds: these are included in many plans, offering diversification.
The trend toward offering more investment options reflects participants’ desire for choice, but it also requires careful curation to avoid overwhelming employees. Safe harbor contributions not only satisfy nondiscrimination testing requirements, but also provide immediate value to employees, making them an attractive recruiting tool.
Measuring success
When asked what defines a successful plan, here’s what we found:
- Participation rates topped the list with the most mentions,
- Investment returns ranked second most, and;
- Plan expenses closely followed in third place.
These priorities have remained consistent since previous surveys we conducted in 2018 and 2021. Notably, participation rates consistently rank first because they directly correlate with employee financial wellness. A plan with excellent investment options means little if employees aren’t participating at meaningful contribution levels.
Timeliness of remittances
The Department of Labor emphasizes contributions should be remitted “as soon as administratively possible.” Our findings show most companies remit quickly, but consistency matters. If one payroll is processed in one day, others taking five days could be considered late. This requirement has real financial implications, as late remittances can result in lost earnings calculations and potential fiduciary breaches that require resolution through the Department of Labor’s voluntary correction programs.
Retirement readiness
- Most respondents rated participants as “moderately ready” for retirement.
- Auto enrollment continues to drive participation: fewer than 25% of participants choose to opt out, proving its effectiveness.
- Roth options are increasingly available, giving participants more flexibility.
The “moderate” retirement readiness rating suggests significant room for improvement. Auto enrollment has proven to be one of the most effective plan design features for increasing participation, particularly among younger employees who might otherwise delay enrollment. The growing availability of Roth options addresses participants’ concerns about future tax rates and provides valuable estate planning benefits.
Why these results matters
A well-managed 401(k) plan isn’t just a compliance requirement. It’s a strategic tool for attracting and retaining talent. Features like auto enrollment, diverse investment options, and timely remittances can significantly impact employee satisfaction and long-term financial security. In today’s competitive job market, employees increasingly view retirement benefits as a key differentiator when choosing between employers.
Ready to benchmark your 401(k) plan against industry standards? Our employee benefit plan team is here to help you evaluate your current plan design, ensure compliance with evolving regulations, and identify opportunities to enhance your plan’s effectiveness as a talent management tool. Contact us today to schedule a free consultation.
Additional content
Don’t forget to check out our latest 401(k) Plan Management Benchmarking Report to see how your organization stacks up against industry standards. You may also be interested in our employee benefit plan audit video series, available on-demand, which covers common audit findings and compliance best practices.
