How to Measure Your Business Retirement Plan's Health
Retirement plan health means your employees save enough, participate at good rates and you follow all legal rules while keeping fees fair. Review your plan design, check compliance with the SECURE 2.0 Act, benchmark your fees against competitors and track participation rates at least annually. Regular evaluations—every two to three years for most companies—protect you legally and help attract better talent.
Plan sponsors who conduct systematic reviews see better outcomes. Their employees save more, participate at higher rates and feel more confident about retirement. Your organization also reduces legal risk and controls costs.
Don't try to manage this alone. Work with your plan provider and consider third-party experts for complex decisions. Here are the essential areas to review.
1. Evaluate your plan design and features
Auto-enrollment drives participation rates higher than voluntary plans. If you don't have this feature, you're likely missing opportunities to help employees save. Current data show that participation among all civilian workers was 56 percent in recent years,¹ but auto-enrollment can push this much higher.
Auto-escalation keeps employees on track once they start saving. This feature automatically increases contribution rates over time, helping workers reach adequate savings levels without constant decision-making.
Consider your vesting schedule and employer matching structure. Competitive matches help attract talent, while reasonable vesting periods encourage retention. Many employers are now exploring emergency savings accounts as well — a new SECURE Act 2.0 provision that lets employees save up to $2,600 in 2026 for short-term needs.⁶
Review your loan and hardship policies. While these features provide flexibility, too-generous loan terms can hurt long-term savings. Strike a balance between employee access and retirement security.
2. Stay current with legal and compliance requirements
ERISA requires you to act in employees' best interests, manage the plan prudently and keep fees reasonable. These aren't suggestions — they're legal obligations with real consequences for non-compliance. The SECURE 2.0 Act brings significant changes you need to address. New plans started after December 29, 2022, must include auto-enrollment by 2025.⁴ High earners with wages above $150,000 can only make catch-up contributions to Roth accounts starting in 2025.
Most SECURE Act 2.0 provisions give you until December 31, 2026, to amend plan documents.⁵ Don't wait until the deadline. Start planning changes now to avoid rushed implementation.
Consider delegating some fiduciary duties to qualified third parties. This can reduce your liability while improving plan management. You still must monitor these providers carefully. Professional fiduciaries bring expertise that many plan sponsors lack.
Document your decisions and review processes. Good documentation protects you legally and helps track your fiduciary responsibilities over time.
3. Benchmark investment performance and fees
High fees quietly drain retirement accounts over decades. Regular benchmarking helps you identify whether your plan delivers competitive value.
Investment fees typically account for the largest portion of plan costs, while recordkeeping and administration make up a smaller percentage.³ Compare your fee structure against similar-sized plans in your industry. If you're paying significantly more, investigate why.
Revenue sharing adds complexity to fee analysis. Many plan sponsors don't fully understand how these payments work or how they affect participants. Ask your provider to explain all revenue-sharing arrangements and consider fee leveling if it benefits your employees.
Work with investment professionals to evaluate fund performance. Compare returns to relevant benchmarks over multiple time periods. Look at consistency and risk-adjusted returns, not just raw performance numbers.
Service quality matters as much as fees and performance. Evaluate your provider's participant education, digital tools and support services. Poor service can hurt participation and satisfaction even when investments perform well.
4. Conduct regular RFP and vendor reviews
The Department of Labor suggests formal benchmarking every three to five years. Many legal experts recommend more frequent reviews, annually for growing plans or every two to three years for stable ones.
A full request for proposal (RFP) process every three to five years tests the market and documents your fiduciary diligence. Between full RFPs, consider mini-RFPs to check specific services or fees.
Plan sponsors often reduce fees after benchmarking. This process also reveals service gaps and improvement opportunities you might miss otherwise.
Document your RFP process thoroughly. Keep records of vendor responses, your evaluation criteria and final decisions. This documentation proves you fulfilled your fiduciary duty to investigate alternatives.
Don't just focus on the lowest fees. Consider the total value package, including service quality, investment options and participant tools. The cheapest option isn't always the best for your employees.
5. Monitor key performance metrics
Track participation rates monthly and benchmark against industry standards. Current participation by all workers averages around 56%,¹ but your goal should be higher with proper plan design.
Average employee deferral rates dropped to 8.9% recently from 9.2% the prior year²—the first decline in three years. Industry benchmarks suggest healthy deferral rates range from 7-10% or higher.
Watch total contribution rates, including employer matches. Strong plans typically see combined rates of 10-15%. If your numbers fall short, consider increasing match rates or improving employee education.
Target Date Fund usage provides insight into investment behavior. About 87.2% of plans with a qualified default investment alternative used a TDF as that default.⁷ High TDF adoption often indicates successful employee communication and smart plan design.
Monitor loan activity and hardship withdrawals. Excessive use of these features may signal financial stress among employees or problems with your emergency fund options.
6. Improve employee education and engagement
Effective education drives better retirement outcomes. The most successful programs provide personalized insights showing employees exactly where they stand and what actions to take.
Use multiple channels to reach employees. Interactive calculators, mobile apps, webinars and one-on-one guidance meet people where they are. The more accessible your education, the more likely it is to drive behavior change.
Tailor messages to different employee groups. Young workers respond to content about compound growth and wealth building. Employees approaching retirement want guidance on catch-up contributions and income planning.
Track educational effectiveness using metrics such as changes in participation rates, increases in deferrals and TDF adoption before and after campaigns. These numbers show which efforts actually change behavior.
Consider adding student loan matching if you employ younger workers. The SECURE 2.0 Act allows employers to match contributions based on student loan payments employees make, giving you another tool for total rewards.
Survey employees regularly about their retirement confidence and understanding. This feedback helps you identify education gaps and measure program success beyond just participation numbers.
7. Address current industry trends
Emergency savings accounts represent a growing trend. The SECURE 2.0 Act allows these accounts as of 2024, enabling employees to save for short-term needs while building retirement security.
Fee leveling has gained traction as plan sponsors seek to ensure all participants pay similar fees regardless of their investment choices.
Professional management continues growing in popularity. Target-date strategies climbed to $4.8 trillion recently, with 54% of total target-date assets⁸ in collective investment trusts, which often provide enhanced oversight and lower costs.
Revenue sharing transparency has become a hot-button issue. Regulators and participants demand clearer fee disclosures. Make sure you understand all revenue sharing in your plan and can explain it to employees.
8. Work with experienced retirement plan professionals
Your retirement plan affects every employee's future security. Regular health checks ensure you meet legal obligations while providing competitive benefits that attract and retain talent.
Partner with providers who understand current regulations and industry trends. SECURE Act 2.0 changes continue rolling out through 2026, and you need guidance to implement them correctly.
At Associated Bank, we've spent over 50 years helping employers build retirement programs that deliver results. Our team understands the complex balance between employee needs and business objectives.
Ready to evaluate your retirement plan's health? Schedule a consultation with one of our experienced advisors. We'll help you identify opportunities for improvement while reducing administrative burden and legal risk.
Contact Associated Bank today to start building a retirement program that your employees value and your organization can manage with confidence.
Key takeaways
- Auto-enrollment and auto-escalation features significantly increase the number of employees who save and the amount they set aside.
- SECURE Act 2.0 requires new compliance deadlines through 2026—start planning changes now instead of waiting.
- High fees quietly drain accounts over decades; benchmark against similar-sized companies in your industry every few years.
- Participation rates around 56% are average, but your goal should be higher with proper plan design and employee education.
- Track participation, deferral rates, and loan activity monthly to catch problems early.
How to Measure Your Business Retirement Plan's Health Frequently Asked Questions
How often should we review our retirement plan?
The Department of Labor suggests a formal review every three to five years. However, many legal experts recommend annual evaluations for growing companies or every two to three years for stable organizations. At a minimum, conduct a thorough benchmarking review every three years to ensure you're meeting fiduciary duties and staying competitive.
What's a healthy 401(k) participation rate?
The current average is around 56% of all civilian workers. However, your target should be higher. Plans with strong design features, such as auto-enrollment and clear education, typically achieve 70-80% participation or better. If your rate lags behind industry standards, review your matching formula, communication strategy, and plan features.
How do we know if our plan fees are too high?
Compare your total fees, including investment management, recordkeeping, and administration, against similar-sized companies in your industry. Investment fees are usually the highest cost. If you're paying significantly more than peers without better service or performance, it's time to conduct a benchmarking review or issue an RFP. Many plan sponsors reduce fees by 20-30% after conducting formal benchmarking.
What's the SECURE Act 2.0, and do we need to make changes?
The SECURE 2.0 Act is legislation that changed retirement plan rules. Key changes include mandatory auto-enrollment for new plans (by 2025), new emergency savings accounts, and student loan matching options. You have until December 31, 2026, to update most plan documents. Start planning now rather than waiting until the deadline to avoid rushed implementation.
Should we delegate fiduciary duties to a third party?
Delegating certain responsibilities to qualified professionals can reduce your personal liability and often improve plan management. You must still monitor these providers and document your decisions, but professional fiduciaries bring expertise that many plan sponsors lack. Consider delegation if your plan is complex or your internal resources are limited.
What deferral rate should our employees target?
Healthy deferral rates typically range from 7-10% of gross pay or higher when combined with employer matches. Financial advisors often recommend saving 15% total (employee plus employer contributions). If your average deferral is below 7%, improved education, higher matching, or auto-escalation features can help boost savings rates.
How can we improve employee participation without spending much?
Auto-enrollment is the single most effective tool and often pays for itself through better outcomes. Pair this with clear, simple education using multiple channels, including email, mobile apps, webinars, and one-on-one guidance—even small improvements in communication drive measurable increases in participation and contribution rates.
Sources
1. https://pensionrights.org/resource/how-many-american-workers-participate-in-workplace-retirement-plans/
2. https://www.cbsnews.com/news/retirement-savings-contribution-cut-warning-sign-dayforce-study/
3. https://www.planadviser.com/adviser-401k-compensation-continues-to-decline/
4. https://www.paychex.com/articles/compliance/secure-act-auto-enrollment-mandate
5. https://kahnlitwin.com/blogs/business-blog/automatic-enrollment-under-secure-2-0-what-plan-sponsors-need-to-know-for-2025-and-beyond
6. https://www.fidelity.com/learning-center/personal-finance/secure-act-2
7. https://www.napa-net.org/news/2025/11/target-date-funds-continue-strong-growth/
8. https://www.morningstar.com/funds/target-date-funds-continue-their-rapid-rise
For Informational/Educational Purposes Only: The opinions expressed may differ from other employees and departments of Associated Bank N.A., or any bank or affiliate. Opinions and strategies described may not be appropriate for everyone and are not intended as specific advice/recommendation for any individual. You should carefully consider your needs and objectives before making any decisions and consult the appropriate professional(s). Outlooks and past performance are not guarantees of future results. (1513)
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