Your company’s 401(k) plan is meant to support employees’ long-term financial health—but what if it’s quietly draining your resources instead? Many employers don’t realize the impact of overlooked or poorly managed plan elements.
These 401(k) plan hidden inefficiencies affect your team’s retirement outcomes and could cost your business more than you think. Here are five common operational flaws to watch out for:
1. High Administrative Fees
Hidden fees are among the most common inefficiencies in 401(k) plans. Without regular reviews, you may be paying more in administrative and fund management fees than necessary. These costs can eat into returns for both employers and employees. Benchmark your plan against industry averages to ensure you’re not overspending.
2. Limited Investment Options
Providing a narrow or underperforming selection of investment options can significantly reduce employee engagement and hinder long-term retirement outcomes. A competitive plan should offer various well-performing funds across risk levels to meet diverse employee needs.
3. Low Employee Engagement
Low employee engagement is one of the more overlooked 401(k) plan hidden inefficiencies. If employees aren’t participating or contributing enough, it could be due to confusing enrollment processes, lack of education, or limited plan awareness. Consider implementing auto-enrollment, offering matching contributions, or conducting educational sessions.
4. Poor Plan Design
Your plan’s structure could be unintentionally creating roadblocks. Complex enrollment processes, unclear matching formulas, or eligibility waiting periods can discourage participation. Streamlining these elements improves usability and boosts the company’s and your workforce’s value.
5. Lack of Professional Oversight
One of the most overlooked pitfalls in 401(k) plans is managing them without professional guidance. Without the help of a financial advisor or retirement plan expert, many businesses miss opportunities to improve their plans. Regular reviews with a professional can uncover cost-saving strategies and ensure compliance with regulations.
Take Control of Your 401(k) Plan Today!
Don’t let unseen issues hold your retirement plan back. Identifying and addressing these 401(k) plan hidden inefficiencies can reduce costs, improve employee satisfaction, and create a stronger foundation for long-term success.
If you’re unsure where to start, look no further than KerberRose. Our team of retirement plan professionals can help you uncover inefficiencies, ensure compliance, and optimize your 401(k) for maximum value for both your business and your employees. Contact us today!