Your 401(k) Shopping List: 25 Must-Ask Questions for Providers

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So you’re shopping for an improved 401(k) plan, congrats!

Whether you inherited an inconvenient plan from your predecessor or you’ve outgrown your current solution, there’s a lot to discover and improve in the process. The good news is with the Department of Labor cracking down on bad 401(k) providers, it’s easier now to identify the best 401(k) providers from the duds. Use this 401(k) shopping checklist to quickly identify your next winning 401(k) provider. 

The work a 401(k) provider does can be divided into five categories:

Employee Experience: Helps employees save for retirement and be more invested at work.

Routine Administrative Work: Completes the day-to-day tasks of sponsoring a 401(k) plan.

Compliance: Ensures your 401(k) plan meets Department of Labor and IRS requirements.

Cost: Keeps fees in the 401(k) plan in check — from plan administration to individual investment fees.

Investment Selection: Offers low-fee fund options that include index and target date funds, as well as in-house, tailor-made portfolios.

Here are the top questions you should ask all of the 401(k) providers that you’re interviewing within those categories. Use these questions to help you compare 401(k) companies, and print this checklist before setting up your complimentary 401(k) benchmark with us at Prosperity 401(k) Advisors. 

Employee Experience

  1. Do you have payroll integration? 
  2. Will I need to do any work related to changes employees make to their plan (savings rates, rebalancing, enrollment status, etc,)?
  3. Are you a 3(38) fiduciary? Or a 3(21) fiduciary?
  4. What are your average participation and savings rates in your book of business?
  5. Can employees easily view and make changes to their accounts online?
  6. Do you support automatic enrollment?
  7. Can you support automatic annual increases to employee savings rates?
  8. Do you track employee eligibility? What work do I need to do when an employee is eligible for the plan?
  9. Will my employees know if they have enough money to retire?
  10. Do you provide financial and investment education for my employees?

Routine Administrative Work & Compliance

  1. Do you provide guidance on non-discrimination testing including regular testing to determine whether the plan is heading toward failing the test?
  2. How often do you run non-discrimination test checks?
  3. Is my plan top-heavy and how will you fix this?
  4. What are your plan design options and how are they unique to fit my needs?
  5. Will you offer alternative solutions to passing nondiscrimination tests?
  6. Will you keep me and my plan updated according to Department of Labor and IRS regulations?
  7. How accessible is plan management – employee data, plan administration, documents, and reports?

Cost & Investment Selection

  1. How often do you complete a full review of all fees, costs, and investment returns?
  2. Do you have the lowest-cost and most resourceful platform?
  3. Do employees have access to investment advisors? What are their certification levels?
  4. Do you have the best 5-Star and 4-Star Funds on your Platform?
  5. How much do you charge employees including the average fund fee? 
  6. What kind of fees, compensation, and funds are there?
  7. Does the fund lineup include target date funds? What is the expense ratio? What is your default fund?
  8. Do you have the highest-rated Target-Date Series of Funds? Should they be “through” or “to” Funds, and do you know the difference?

If any of these answers are “No,” “Maybe,” or just plain vague, take that as a warning sign. They can still be a good provider but go into this knowing that you may be subject to more obstacles and work on your end. 

You might be on the hook to run compliance test calculations on your own and without automatic enrollment support, your participation rates can take a big hit. Perhaps you’ll struggle to pass those same compliance tests but find little support for alternative options.

A Smooth Transition to Prosperity 401(k)

In any case, your winning 401(k) provider can answer all of the questions above with confidence, clarity, and certainty – our core values at Prosperity 401(k) Advisors. 

When you switch to Prosperity 401(k), both you and your employees will experience a smooth transition to wealth growth and retirement. You’ll have stellar clarity when handling complex investment, asset management & retirement planning issues. And lastly, you’ll have clear certainty as our team stands by ready to address your 401(k) and retirement goals. 

When you’re ready to come over, we’re ready to have you. 

Book your complimentary benchmark below to get started today. 

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