Twelve Tips for a Great 401k Plan

Twelve Tips for a Great 401k Plan

As the plan sponsor, how do I know we have a great 401k plan? You could do a review on your plan by reviewing the provider, checking the investment menu or benchmarking. The important thing is to be objective in your analysis. Use a 401k Advisor and Fiduciary to help you conduct these exercises for a great 401k plan.

1. Research Plan Provider

Do thorough research on the plan provider to check on their rankings in various categories. Different plan providers could be more suitable based off your company’s plan type and plan size.

2. Objectively Benchmark the Plan

Plan providers will insist they have benchmarking tools for you to use. Plan providers have become biased because their tools do not benchmark themselves.

3. Low Fee Investment Menu

It is important to have mutual funds in the menu that are low fees. Having the low fee alternative will significantly increase returns overtime.

4. Diversification

Plan Sponsors need to check diversification in the investment menu. Plan sponsors make the mistake of having highly correlated funds in the investment menu.

5. Avoid Proprietary Date Funds

Beware of plan providers offering mutual funds that charge excessive hidden fees on the participants for no added value.

6. Fund Fee Analysis

Regularly conduct a fee analysis on the investment menu and their expense ratios and see if there are potential alternatives for participant fee saving opportunities.

7. Admin Fee Analysis

Conduct a fee analysis on admin costs. This includes recordkeeping, advisor, auditor costs and much more. Costs over the industry average is unreasonable.

8. Rate of Return

Compare the plans rate of return against other plans in similar industries. It is important to check if the rate of return is underperforming the industry average.

9. Participation Rate

Participation rate of the employees is an important indicator to help you determine the employees’ knowledge of the retirement plan and whether we need to bring awareness.

10. Average Participant Contribution

Contribution will help as a gauge for interest and knowledge on the retirement plan. Added tools and investment insights can help increase this.

11. Fiduciary Advisor

Having a fiduciary advisor on your plan gives you the peace of mind to ensure they are working in your best interest. To verify this, check the investment menu’s fiduciary ratings and any hidden fees.

12. Avoid Conflicts of Interest

If your plan provider and advisor are from the same company, there will be a clear conflict of interest in plan design and investment options.


Sammy Khalil is a 401k Fiduciary from Nyx Moros, a firm which advises on Company 401k plans. Sammy conducts full analysis by benchmarking retirement plans holistically. This ensures the entire plan is in the plan sponsor's best interest. Being independent means we can be transparent in all advice we provide. For more information please visit