Benchmarking – A Tool for Your 401(k) Plan

Paul Patitucci, Vice President, Retirement Plan Services, Univest Bank and Trust Co.

Philip C. Jackson After a full year of 408(b)(2) fee disclosure, do you feel better informed on the true costs of your 401(k) plan? As a business owner, not knowing all of the costs can be an expensive endeavor. Did you know that the required fee disclosure does not cover all of the fees associated with your plan? Only the "indirect costs" of the plan need be disclosed in the 408(b)(2). It is assumed that the business knows all of the direct costs of the plan.

Unfortunately, while the intentions of the regulations were good, the delivery was confusing. Even if you fully understand the costs of your plan, do you know if the price is reasonable? This has spurred a new trend in the 401(k) business that has helped simplify what your plan is delivering, what you are paying and the reasonableness of both: benchmarking.

Better Understand the Costs of Your Plan

A simple benchmarking report of your 401(k) plan can help you better understand the total costs of the plan and put that number in perspective by comparing your costs with plans of similar sizes. A more in-depth report can usually help you lower your costs, increase service to you and your plan participants, as well as reduce your fiduciary liability as the plan sponsor.

Benchmarking can be a laborious exercise if you do not have good resources. Hopefully you are working with an advisor who specializes in retirement plans and has access to quality tools. In many cases, specialists will already be doing this type of monitoring behind the scenes to make sure you are using an appropriate product, have the appropriate plan design and that the plan is working for you and your employees. Your advisor should also be helping you make sure that your plan is in compliance and not exposing you to legal issues.

The bottom line is that benchmarking has become an integral exercise to make sure you are getting what you are paying for. Whether you are working with an advisor who can provide this service or if you are considering hiring a consultant, this exercise will help ensure a brighter tomorrow for you and your employees. Univest Retirement Plan Services is here to help. Contact us at 215-721-2451 or email.

Securities and insurance products are offered through Univest Investments, Inc., member FINRA and SIPC, a licensed subsidiary of Univest Corporation of Pennsylvania. They are not FDIC insured, are not a deposit of or bank guaranteed, and are subject to risks, including possible loss of principal amount invested. Consult a tax advisor regarding what may be best for your personal situation.


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