Start with what the plan is for
Most plans are established for a mix of reasons — recruiting and retention, tax efficiency for the owners, and a genuine desire to see employees retire well. Those goals pull design in different directions, and a plan that has never articulated which one leads tends to drift into whatever the provider offered at setup.
The four areas below are where that drift shows up, in rough order of how much they affect the outcome. Each links to a fuller discussion.
1. Get the costs right
Plan fees are a permanent reduction in the rate at which every participant account compounds, which means small differences accumulate into large ones. ERISA does not require a plan to be cheap — it requires fiduciaries to know what the plan pays, to compare that against genuinely similar plans, and to document the reasoning.
The most common failure is not overpaying. It is never having checked, particularly after the plan has grown enough that its per-participant costs should have fallen.
- →Benchmark total plan cost against plans of similar size, ideally in a similar industry.
- →Ask every provider for compensation in dollars, including indirect payments.
- →Revisit after significant asset growth, not only at renewal.
2. Give employees a Roth choice
A Roth option costs the business very little to add and changes the retirement arithmetic for a large share of the workforce — particularly younger employees in low brackets today and high earners with no other route to Roth savings.
SECURE 2.0 also requires catch-up contributions from higher-paid employees to be made on a Roth basis, which means a plan without the feature cannot accept them at all.
- →Confirm the recordkeeper and payroll provider both support Roth deferrals.
- →Budget for employee education — an option nobody understands goes unused.
3. Build a lineup people can actually use
Longer fund menus produce worse participant outcomes, not better ones. A well-built lineup covers the major asset classes without redundancy, holds every fund in the lowest share class the plan qualifies for, and treats the default investment option as the most important decision on the list — because that is where most of the money will sit.
- →Roughly fifteen to twenty-five options plus a target-date series is a common landing point.
- →Verify share class eligibility; identical funds are often available cheaper.
- →Choose and document the default option deliberately.
4. Make sure someone is actually watching
Sponsoring a plan makes the business a fiduciary whether or not anyone on staff has the expertise. An engaged advisor takes on a defined share of that duty in writing and produces a visible record: committee meetings, an applied investment policy statement, documented fee benchmarking, and education that reaches employees who are not already contributing.
If a year has gone by with no meeting, no documents, and no questions, that absence is the finding.
- →Establish the advisor's fiduciary status in writing — 3(21) or 3(38).
- →Hold and minute a committee meeting at a set interval.
- →Keep the investment policy statement current and actually apply it.
Where to see your own numbers
Every plan with 100 or more participants files a Form 5500 annually with the Department of Labor, and every one of those filings is public record. Schedule H reports plan assets and total administrative expenses. Schedule C names each service provider paid more than five thousand dollars and the formula under which they were paid. Plan characteristic codes indicate features such as a designated Roth account, automatic enrollment, and safe harbor status.
That filing is the same source a prospective advisor uses when preparing a plan review. There is no reason the sponsor should be the one who has not read it.