Running a 401(k) plan isn’t a “set it and forget it” responsibility. In today’s regulatory and economic landscape, plan sponsors must actively monitor and optimize their retirement plans. That’s where a 401(k) plan review becomes essential.
But what exactly does a comprehensive plan review entail? And what should you, as a plan sponsor, be prepared for?
In this guide, Full Focus Financial outlines what to expect during a 401(k) plan review—from compliance checks to investment analysis—and provides a sponsor’s checklist to help you keep your plan efficient, competitive, and compliant.
Why a 401(k) Plan Review Matters
Under ERISA, plan sponsors are fiduciaries. This means they must act in the best interest of plan participants by regularly reviewing investments, plan fees, compliance requirements, and service providers.
Failing to conduct reviews may result in:
Excessive plan fees
Legal or regulatory penalties
Poor retirement outcomes for employees
Personal fiduciary liability
Full Focus Financial emphasizes that structured, periodic reviews mitigate risks, improve participant engagement, and demonstrate fiduciary diligence.
What Is a 401(k) Plan Review?
A 401(k) plan review is a formal evaluation of a plan’s design, performance, costs, compliance, and alignment with both organizational goals and employee needs. At minimum, it should be conducted annually, with mid-year or quarterly check-ins as needed.
Key areas of focus include:
Investment performance and fund lineup
Participation and savings trends
Administrative and compliance issues
Provider service levels and costs
Sponsor’s 401(k) Plan Review Checklist
1. Review the Plan Document and Design
Confirm your plan document reflects current operations and goals.
Questions to ask:
Are eligibility rules, match formulas, and vesting schedules accurate?
Does the plan comply with recent legislation (e.g., SECURE 2.0)?
Should features like Roth contributions, auto-enrollment, or loans be added?
Full Focus Financial Tip: A well-designed plan boosts participation while controlling costs and administrative complexity.
2. Evaluate Investment Lineup and Performance
Investment oversight is a core fiduciary duty.
Ask:
Are fund options performing in line with benchmarks?
Is the lineup diversified across equities, fixed income, and target-date funds?
Are any funds consistently underperforming?
Also confirm your Investment Policy Statement (IPS) is being followed and updated when needed.
Full Focus Financial provides in-depth investment analysis reports, including peer comparisons and recommendations, giving sponsors clarity and confidence in decision-making.
3. Assess Plan Fees and Costs
Plan fees are one of the most common areas of scrutiny in DOL audits. Sponsors must ensure fees are reasonable for the services provided.
Ask:
What are our recordkeeping, advisory, and investment fees?
Are there hidden revenue-sharing arrangements?
How do our fees compare to similar-sized plans?
Benchmarking against national averages is key. If fees are out of line, renegotiate or consider changing providers.
4. Monitor Participation and Deferral Rates
Participation rates and employee contributions are strong indicators of plan health.
Review:
Participation rates across departments and demographics
Average salary deferral rates
Whether employees are utilizing employer match contributions
Full Focus Financial works with sponsors to boost participation through employee education, automatic features, and optimized plan design.
5. Confirm Compliance and Operational Accuracy
Operational errors are a major compliance risk. Ensure your plan operates exactly as written.
Check for:
Timely contribution deposits
Correct eligibility and vesting tracking
Distribution of required notices (SPD, 404a-5, etc.)
Proper completion of nondiscrimination tests (ADP/ACP)
If errors occurred, document corrections and ensure they were handled through IRS or DOL correction programs (EPCRS/VFCP).
6. Evaluate Provider Service Levels
Your service providers—TPA, recordkeeper, and advisor—play a critical role in plan success.
Ask:
Are they responsive and proactive?
Do they provide fiduciary support (3(16), 3(38))?
Is their technology and reporting user-friendly?
If providers are falling short, explore alternatives. Full Focus Financial assists employers in evaluating and transitioning providers seamlessly.
7. Strengthen Fiduciary Governance Practices
Strong governance protects sponsors from liability and supports prudent decision-making.
During reviews, ensure:
Meeting minutes and action items are documented
Fiduciary roles are clearly defined in writing
Committee members are trained and aware of responsibilities
Full Focus Financial offers fiduciary training and governance templates to keep sponsors aligned with ERISA standards.
After the Review: Turning Insights into Action
A thorough 401(k) plan review should lead to actionable steps, such as:
Replacing underperforming funds
Adjusting plan design to boost participation
Correcting compliance issues
Updating or renegotiating provider contracts
Scheduling follow-up reviews
Document all decisions and rationales. This not only strengthens compliance records but also demonstrates fiduciary diligence.
Final Thoughts
Regular 401(k) plan reviews allow you to protect your organization, support employees’ retirement readiness, and confidently fulfill your fiduciary duties. By following a structured checklist, sponsors can ensure their plans remain compliant, competitive, and valuable.
Need Help with Your 401(k) Plan Review?
Full Focus Financial specializes in guiding employers through plan reviews, offering:
Comprehensive fiduciary compliance reviews
Investment and fee benchmarking
Employee education and engagement strategies
Provider evaluations and recommendations
Ongoing year-round support
Schedule your complimentary 401(k) plan review with Full Focus Financial today and uncover how much more value your retirement plan could deliver—with the right partner.