For millions of Americans, employer-sponsored 401(k) plans represent the primary vehicle for retirement wealth building. As competition for talent intensifies, the quality and competitiveness of these retirement plans has become a critical differentiator in recruitment and retention.

Plan sponsors face dual pressures: attracting top talent with competitive benefits while meeting fiduciary obligations under legal and regulatory guidelines. Regular benchmarking helps address both challenges by ensuring plans remain competitive and compliant.

What is 401(k) plan benchmarking?

401(k) plan benchmarking involves systematically comparing your company’s retirement plan against similar offerings in the marketplace. This process evaluates key metrics including fees, investment options, participant services and overall plan performance to assess competitiveness and compliance.

Benchmarking serves two main strategic and regulatory purposes:

• Competitive advantage: Maintaining edge in talent acquisition and retention
• Regulatory compliance: Meeting U.S. Department of Labor fiduciary requirements

As fiduciaries, plan sponsors already bear legal responsibility for plan management. Regular benchmarking helps fulfill these existing obligations by demonstrating diligent oversight of fees, services and plan performance.

How 401(k) quality impacts talent acquisition

The competitive landscape for talent has made retirement benefits a strategic differentiator. Companies that don’t regularly assess and adapt their 401(k) offerings risk falling behind in the war for talent.

“Most employers view the 401(k) as the most important benefit when it comes to attracting talent, even above their health insurance plan,” said Charlie Cote, head of retirement plan sales at J.P. Morgan. “It’s a battle for talent out there. Employers are looking to upgrade their employee benefits so they can keep the talent they have and attract new talent.”

A quality 401(k) plan drives these important factors:

• Recruitment leverage: Quality retirement benefits can attract top candidates
• Retention strategy: Competitive plans can reduce turnover risk
• Brand differentiation: Superior offerings distinguish employers in crowded markets

Key metrics to evaluate in 401(k) benchmarking

Effective 401(k) benchmarking requires evaluating multiple dimensions of plan performance and cost structure. Fee analysis often reveals the most significant opportunities for improvement.

A benchmarking exercise will also explore several aspects of the plan’s design, including: 

• Matching and contributions: Employer formulas and contribution levels relative to industry standards
• Vesting and profit-sharing: Benefit structures and qualification requirements
• Participation rates: Employee engagement compared to similar companies
• Investment options: Menu breadth and fund performance metrics

And they also factor in customer service quality in a few ways:

• Relationship management: Account team responsiveness and continuity
• Participant support: Call center performance and service quality
• Education and communication: Resource availability and effectiveness

“Not all 401(k) plan providers are super transparent,” Cote said. “In benchmarking, we are able to show them, ‘here’s what they are paying and how that cost compares to the average plan in their industry.’ It gives them that kind of baseline benchmark.”

As plans grow, the considerations can get more advanced, assessing:

• Revenue-sharing structures: Total cost analysis including fee arrangements
• Economies of scale opportunities: Asset growth enabling lower-cost share classes
• Enterprise pricing: Integrated solutions reducing overall plan expenses

Plan asset growth over time creates opportunities for cost optimization that benchmarking can help identify. As contributions accumulate and investments appreciate, plans may qualify for institutional pricing tiers previously unavailable. 

“Every two weeks there’s new money going into the plan,” Cote said. “In two to three years, the size of the plan can be significantly larger, and you should be able to benefit from the economies of scale.”

Many plan sponsors discover substantial cost discrepancies during benchmarking. J.P. Morgan Retirement Link offers no-cost, no-obligation benchmarking sessions using data from more than 375,000 plans, enabling meaningful comparisons across similar company profiles and industries.