The CFO’s Guide to Benchmarking a 401k Plan
There’s a smarter way to measure performance, save costs, and maximize value in your 401k plan.
If you’re a business owner, CEO, or CFO, chances are your 401(k) plan isn’t getting the scrutiny it deserves. You’re focused on building the business, managing cash flow, and taking care of your team. But under the surface, your retirement plan might be underperforming and overcharging.
When was the last time you benchmarked your company’s 401(k) plan against your peers? Are your fees competitive? Is your plan structure optimized to reduce taxes for owners and reward employees in a way that drives retention?
You don’t need to guess. You need clarity. And that starts with benchmarking.
What Does It Mean to Benchmark Your 401(k) Plan?
Benchmarking your 401(k) plan means comparing its performance, design, and fees to similar plans in your industry, size range, and region. It’s how leading companies identify whether their plan is competitive, or quietly draining money through outdated design and bloated fees.
Why Benchmarking Matters for Employers
Poorly structured retirement plans aren’t just a problem for employees, they’re a risk for your business. Excessive fees and underperforming investments can trigger compliance issues, cause employee dissatisfaction, and diminish your compensation strategy.
Benchmarking uncovers opportunities to:
- Reduce administrative and investment costs
- Improve participation and contribution rates
- Optimize tax outcomes for owners and highly compensated employees
- Create a stronger recruiting and retention advantage
The Impact of a Competitive 401(k) on Employee Retention
Employees value benefits they can use. A well-designed 401(k) plan signals that you invest in their future. When your plan matches or beats industry standards, it becomes a retention tool, not just a compliance requirement.
Key Metrics to Benchmark in Your 401(k) Plan
Benchmarking is more than just comparing fees, it’s about assessing the full value of your plan.
Plan Participation Rates and Employee Contributions
Are your employees using the plan? Benchmarking participation and average deferral rates shows how your plan is performing as a benefit, not just as a tax shelter.
Employer Matching and Vesting Schedules
Your match structure affects both cost and retention. Are you offering more than the market? Less? Benchmarking helps you find the sweet spot that aligns with your goals.
Investment Performance vs. Industry Averages
How do your funds perform against benchmarks? Are participants concentrated in outdated or overly expensive investment options?
Administrative and Investment Fees Compared to Peers
Many plans are still loaded with 1%+ fees that don’t reflect current market rates. Benchmarking puts your costs in context and reveals where to negotiate or switch providers.
How PolicySmart’s Benchmarking Tool Works
We don’t sell insurance. We fix it. The same applies to retirement plans.
Access to 13,000+ Retirement Plan Specialists
Our proprietary database connects your business with the most competitive providers in the marketplace, without forcing you to change advisors or brokers.
600,000+ Data Points Analyzed for Smarter Comparisons
We don’t guess. We use real data from plans of similar size and structure to give you accurate, actionable insights.
Independent Insights for Reducing Costs & Enhancing Benefits
Because we’re not paid by providers, we can deliver unbiased recommendations that serve your bottom line, not someone else’s sales quota.
Case Studies: How Benchmarking Saves Businesses Money
Employers Who Reduced Fees Without Cutting Benefits
A regional construction firm reduced plan fees by 45%, without touching their match or switching platforms, just by renegotiating based on benchmarking insights.
$130M+ Saved Through Data-Driven Retirement Plan Reviews
Since inception, PolicySmart has helped businesses save over $130 million across insurance, health, and retirement programs, all without requiring broker changes.
How One Company Improved Plan Participation by 30%
After redesigning their plan structure based on benchmarking data, one firm increased employee participation by 30%, dramatically improving the perceived value of their benefits package.
Step-by-Step Guide to Benchmarking Your 401(k) Plan
Here’s what the process looks like:
1. Collect Data on Your Current Plan Costs and Features
This includes your investment lineup, match formula, fee disclosures, and participation data.
2. Compare Against Industry Averages and Competitors
We analyze thousands of comparable plans in your sector and employee size to give you a true apples-to-apples view.
3. Identify Opportunities for Cost Savings and Better Offerings
Whether it’s renegotiating fees, replacing underperforming funds, or optimizing match structure, our process gives you a clear set of options with measurable outcomes.
Common Mistakes to Avoid When Benchmarking a 401(k) Plan
- Using out-of-date benchmarks: Markets shift. Your last benchmarking review might already be obsolete.
- Focusing only on fees: Fees matter, but design, investment performance, and utilization are just as important.
- Letting brokers drive the process: Brokers often have sales incentives. Independent benchmarking brings objectivity back into the equation.
Bottom line? If your 401(k) plan hasn’t been benchmarked recently, you’re flying blind, and possibly bleeding cash.
At PolicySmart, we give business leaders a smarter, faster way to uncover savings, eliminate unnecessary fees, and build retirement plans that actually work for owners and employees alike.
You don’t need to start over. You just need someone who knows how to make your current plan work harder.
We don’t sell insurance. We fix it.
Ready to benchmark your 401(k)? Contact us today.