Is your company 401(k) any good? Give it a checkup.
Seven quick questions about your company plan. See where it looks solid and where it is worth a second look.
Not sure on one? Pick “I'm not sure” and we'll sort it out with you. There are no wrong answers here.
For educational purposes only.
What this checksShow the full list
When were your plan's fees last benchmarked against the market?
- Within the last year. Benchmarking yearly is the standard of care. Keep the documentation in your plan file.
- One to three years ago. Plan pricing drifts. A fresh benchmark shows whether your recordkeeping, admin, and advisor costs still beat the market.
- More than three years ago. This is the most common gap we find. Pricing has fallen a lot, and an old contract often leaves money on the table.
- Never. If it has never been benchmarked, that is the first thing we would put real numbers to.
- I'm not sure. No problem, plenty of owners don't know this offhand. We can pull it and benchmark it for you.
Do you know your plan's all-in cost as a percentage of assets?
- Yes, I know the all-in number. Knowing the total (recordkeeping, admin, advisor, and fund expenses) in one number is half the battle.
- I know some of the pieces. Hidden revenue sharing and fund expenses are where cost usually lives. A benchmark pulls it into one figure.
- I'm not sure. Worth knowing, and plenty of sponsors don't offhand. Getting to one clear percentage is exactly what we help with.
Do you have a documented investment policy and a regular review process?
- Yes, documented and followed. A written investment policy statement and a steady review cadence are what make fiduciary decisions defensible.
- We have something, but it is dated. An out-of-date policy can be worse than none. A review would refresh it and restart the meeting cadence.
- No. Without a documented process, fiduciary decisions are hard to defend if they are ever questioned. We can set one up.
- I'm not sure. Easy to check. If there isn't one in place, we can put a simple, documented process together with you.
Is your advisor a fiduciary on the plan, and at what level?
- Yes, a 3(38) investment manager. A 3(38) takes on the investment decisions and the liability that comes with them. That is the strongest coverage.
- Yes, a 3(21) co-fiduciary. A 3(21) advises and shares fiduciary responsibility. Solid, as long as the process is documented.
- No, or just a broker. A broker is not a fiduciary and can earn commissions. Worth knowing who is actually on the hook.
- I'm not sure. Plenty of owners aren't. We can confirm who is actually the fiduciary on your plan, and at what level.
About what share of eligible employees actively participate?
- Over 70%. Strong participation usually means the design and the education are working.
- 40% to 70%. Middling participation often points to enrollment friction or a match that is not pulling people in.
- Under 40%. Low participation is usually fixable with auto-enrollment, a better match, or clearer education.
- I'm not sure. Easy to pull from your provider. We can find your participation rate with you.
Does the plan automatically enroll new employees?
- Yes. Auto-enrollment is the single biggest lever on participation, and many newer plans are required to have it.
- No. Adding auto-enrollment, and auto-escalation, is the fastest way to lift participation. Some plans are now required to.
- I'm not sure. No problem. We can confirm whether your plan auto-enrolls, and whether it is required to.
Does the company match or contribute?
- Yes, we match or contribute. A match drives participation and helps you recruit and keep people. Worth checking the formula is still competitive.
- No. No match is a choice, not a failing, but it usually shows up in lower participation and in hiring.
- I'm not sure. We can confirm your current formula and whether it still stacks up.
Does your plan offer a Roth (after-tax) contribution option?
- Yes. Good. A Roth option is popular with employees and costs the plan nothing to add.
- No. A Roth option gives employees a tax choice many of them want, and it is usually easy to add.
- I'm not sure. We can confirm whether your plan has a Roth option, and add one if it does not.
Common questions
How do I know if my company 401(k) is any good?
Look at four things: the all-in fees versus the market, whether there is a documented fiduciary process, whether your advisor is an actual fiduciary, and how many employees participate. This checkup walks through each. A formal benchmark puts hard numbers to it.
What is a 401(k) fee benchmark?
It compares what you pay for recordkeeping, administration, advice, and the funds themselves against what similar plans pay. Because plan pricing has fallen over the years, older plans often turn out to be overpaying without knowing it.
What is the difference between a 3(21) and a 3(38) fiduciary?
A 3(21) advisor recommends investments and shares fiduciary responsibility with you. A 3(38) investment manager makes the investment decisions and takes on that liability directly. Both are fiduciaries; a 3(38) carries more of the load.
Is this a real plan audit?
No. It is an educational self-assessment to help you see where to look. It is not an ERISA plan audit, and it is not advice or a recommendation. A ClearMind advisor would review your actual plan documents and data before anything is decided.
This page is general information for people exploring our services and is not investment, tax, or legal advice or a recommendation for any specific person or situation. The examples are illustrative, are not based on actual clients, and are not a promise of results. Strategies such as S-corp elections, backdoor and mega-backdoor Roth contributions, equity-comp decisions, and deferred compensation depend on your specific situation and current law, so confirm the details with a qualified professional before acting. ClearMind Capital LLC is a registered investment adviser; registration does not imply a certain level of skill or training. Past performance is not indicative of future results.
