A successful retirement plan isn't something you set up and forget. As your workforce evolves, regulations change, and your goals shift, your plan should be reviewed regularly to ensure it continues to meet the needs of both your employees and your business. An annual review is one of the best ways to evaluate performance, fulfill your fiduciary responsibilities, and identify opportunities for improvement.
An annual review doesn't necessarily mean making major changes each year. It's an opportunity to confirm that your plan remains effective, competitive, and aligned with your objectives.
Why conduct an annual plan review?
An annual review lets sponsors take a comprehensive look at how the plan is performing. Regular reviews help you:
- Evaluate whether the plan meets its intended goals
- Monitor participant outcomes
- Identify operational or compliance concerns
- Review plan costs and service providers
- Demonstrate prudent fiduciary oversight
Documenting these reviews also helps show that plan decisions are made thoughtfully and consistently.
Review participant engagement
One of the first areas to evaluate is how employees interact with the plan. Consider reviewing:
- Participation rates
- Average employee deferral rates
- Employer match utilization
- Enrollment trends among new hires
- Use of automatic enrollment or escalation features
These metrics help determine whether employees are taking full advantage of the benefits you provide.
Evaluate investments
Plan sponsors have an ongoing responsibility to monitor the plan's investment options. During your review, consider:
- Whether options continue to perform as expected
- Whether the lineup remains appropriately diversified
- Whether underperforming funds should be reviewed or replaced
- Whether target-date or other default investments remain appropriate
Investment performance should be evaluated over appropriate long-term periods rather than reacting to short-term market swings.
Review fees and service providers
Fees directly affect participants' savings, making them an important part of every review. Consider evaluating:
- Recordkeeping fees
- Investment expenses
- Administrative costs
- Advisor compensation
- Third-party administrator services
It's also a good time to assess whether your providers continue to deliver the expertise, responsiveness, and support your organization expects.
Confirm compliance
Annual reviews should include a look at your compliance responsibilities. Topics may include:
- Timely employee contribution deposits
- Required compliance testing
- Form 5500 preparation and filing
- Participant notices
- Required plan amendments
- Fiduciary documentation and governance practices
Addressing potential issues early helps reduce the likelihood of costly compliance problems later.
Consider your plan design
As your workforce changes, your plan may benefit from updates that improve participation and outcomes. Ask questions such as:
- Is the employer match still competitive?
- Should automatic enrollment or escalation be added or updated?
- Are employees saving enough for retirement?
- Are there opportunities to simplify administration?
- Does the plan still support our recruitment and retention goals?
Even small design enhancements can meaningfully improve engagement and retirement readiness.
Document the review
An annual review is most valuable when it's properly documented. Meeting notes, reports, committee minutes, and summaries of decisions provide a record of the process and help demonstrate prudent oversight. Organized documentation also makes future reviews more efficient and supports your fiduciary responsibilities.
The bottom line
Conducting an annual review helps ensure your plan continues to serve your employees while meeting your organization's goals and compliance obligations. By reviewing engagement, investments, fees, providers, design, and regulatory requirements each year, sponsors can identify opportunities and make informed decisions that strengthen the plan. We can help you analyze performance, review key metrics, evaluate providers, and enhance your plan so it keeps delivering value.
This material is provided for general informational purposes only and is not intended as tax, legal, or fiduciary advice. Specific compliance requirements and deadlines depend on your plan's design and circumstances. Consult your retirement plan professionals before acting.