Choosing 401(k) providers is a strategic decision that affects employee satisfaction and fiduciary obligations. Yet many plan sponsors stay with suboptimal providers simply due to established routines and the complexity of a transition.
“Inertia is a powerful force,” said Charlie Cote, a managing director and head of retirement plan sales for J.P. Morgan. “You see a lot of 401(k) plan providers keep clients just by virtue of their clients not wanting to go through the process of changing.”
Regular provider evaluations help ensure optimal outcomes for your company and participants. The assessment process involves asking the right questions of three key sources: your internal team, prospective providers and industry peers.
Cote outlines the essential questions midsize companies should ask during provider evaluation—organized by whether you’re assessing internal needs, comparing provider capabilities or benchmarking against industry standards.
Internal assessment: When to evaluate your 401(k) provider
Companies should ask themselves whether their current provider meets expectations in three critical areas: cost management, service quality and investment performance.
Internal questions about fee structure:
- “Does our pricing exceed industry benchmarks for similar plan sizes?”
- “Have our fees decreased as our plan has grown, or do we face fee escalation over time?”
- “Do we fully understand our total cost structure and fee arrangements?”
Internal questions about service quality:
- “Are our account teams responsive, or do we experience frequent personnel turnover?”
- “Do participants receive timely, accurate support from call centers and digital platforms?”
- “Does our technology platform meet modern user experience expectations?”
Internal questions about investment performance:
- “Has our fund lineup evolved with market developments, or are we offering outdated investment options?”
- “Are our investment options consistently meeting or trailing relevant benchmarks over time?”
- “Do we offer sufficient investment variety to meet different employee needs and risk preferences?”
How to evaluate 401(k) provider fees
When comparing providers, ask specific questions about fee structures and pricing models. Direct comparisons require understanding both fee types and pricing methodologies across different providers.
Here are a few key fee questions to ask each provider:
- Pricing structure: “Do you charge asset-based fees, per-participant fees or a hybrid model? How do rates change as our plan grows?”
- Transaction costs: “What are your fees for loans, distributions and plan changes?”
- Investment integration: “Do you offer cost reductions for using proprietary funds? What are the full recordkeeping fees if we use third-party investment managers?”
- Hidden costs: “What additional fees might we encounter for services like compliance support, participant communications or plan amendments?”
Provider questions: How to evaluate 401(k) provider service quality and support
Service quality evaluation requires specific questions about measurable performance metrics and support capabilities. You can use these structured inquiries to gather objective data about each provider’s service delivery.
Key service questions to ask each provider:
- Account management: “Who will be our primary contacts, and what’s your average account manager tenure? What are your standard response times for plan sponsor inquiries?”
- Participant support: “What are your call center performance metrics for response times and resolution rates? How do participants access accounts digitally and on mobile devices?”
- Educational resources: “What financial wellness programs and retirement planning guidance do you provide to participants?”
- Implementation support: “What dedicated transition support do you provide? How long does implementation typically take?”
- Ongoing compliance: “How do you handle regulatory updates and required plan amendments?”
- Technology platform: “Can you provide a demo of your participant portal and plan sponsor dashboard? What reporting capabilities do you offer?”
Peer benchmarking: Questions to ask industry contacts
Beyond internal assessment and provider interviews, gathering insights from other companies provides valuable context for your evaluation. Professional networks, industry associations and consultant relationships can offer candid feedback about provider performance and transition experiences.
Third-party client satisfaction surveys provide standardized performance data across the industry that prospective 401(k) providers can readily share. Plan sponsors weighing different providers should specifically request these independent ratings as part of their evaluation process.
Cote said the first question he’d ask a prospective 401(k) provider is to speak to other active clients. Many providers will connect you to companies of a comparable size to yours who can speak frankly about their experiences.
Cost benchmarking questions
Rather than navigating complex fee comparisons independently, many plan sponsors benefit from professional benchmarking analysis. These sessions can help provide objective cost comparisons using data from hundreds of thousands of plans.
J.P. Morgan Retirement Link offers complimentary, no-obligation benchmarking sessions. Contact our Retirement Link team to schedule yours.
Key questions to ask consultants or peer organizations:
- “What fee ranges are typical for plans of our size and complexity?”
- “Which providers offer the most competitive pricing for companies with [X] participants and [Y] assets?”
- “How do our current fees compare to industry benchmarks?”
- “What hidden costs should we watch for during provider evaluations?”
- “Have you seen fee reductions during contract renewals, and what strategies work best?”
Service experience questions
Questions to ask peer companies about their 401(k) provider’s performance
- “How would you rate your provider’s account management and responsiveness?”
- “What has been your participant feedback been regarding call center support and digital platforms?”
- “How effectively does your provider handle compliance updates and plan amendments?”
- “Which providers have the strongest educational resources and participant engagement?”
- “What service issues should we be aware of with this provider?”
Transition experience questions
Questions to ask peer companies about their 401(k) provider transition
- “How long did your implementation take from contract execution to full completion?”
- “What transition challenges should we prepare for, and how can we minimize disruption?
- “Did your provider assign dedicated transition managers for the entire process?”
- “How well did the provider replicate your current payroll system’s connectivity?”
- “What would you do differently if you switched providers again?”
Managing expectations during a 401(k) transition
Provider transitions require careful coordination across multiple stakeholders and systems. Understanding a prospective provider’s transition capabilities helps ensure smooth implementation and minimal disruption to your participating employees.
A change in providers typically takes 60 to 90 days from contract execution to full implementation, Cote said, requiring coordination between the outgoing provider, the incoming provider and the plan sponsor’s internal teams.
Key transition evaluation questions:
- Implementation support: Does the provider assign dedicated transition managers for the entire process?
- Payment integration: Can the provider replicate your current payroll system’s connectivity?
- Participant communication: What notice periods and communication templates does the provider offer?
- Data conversion: How does the provider handle asset transfers and participant account transitions?
Managing the evaluation and transition process
Putting it all together:
A comprehensive 401(k) provider evaluation combines internal assessment, direct provider comparisons and peer benchmarking insights. This structured approach helps ensure you make informed decisions that serve both your company’s fiduciary responsibilities and your employees’ retirement outcomes.
Cote said hundreds of 401(k) plans change from one provider to another across the industry each month, and plan participants typically experience minimal disruption when transitions are well-managed.
A typical transition timeline:
- 30-day advance notice: Initial announcement of provider change
- 15-day blackout notice: A period where account changes are restricted
- Implementation completion: New system access and account confirmations
We’re here to help
Comprehensive 401(k) evaluation requires specialized expertise and access to extensive industry data. Professional guidance helps ensure accurate comparisons and proper interpretation of results.
J.P. Morgan Retirement Link’s plan specialists provide no-cost benchmarking sessions. Our team can help you understand your current position relative to market standards and identify opportunities to enhance your plan.
JPMorgan Chase Bank, N.A. Member FDIC. Visit jpmorgan.com/commercial-banking/legal-disclaimer for disclosures and disclaimers related to this content.