Benchmarking – Understanding What Qualifies as ‘Reasonable and Prudent’


New Requirements and Penalties for Plan Sponsors

As of July 1, 2012, sponsors are required to know all expenses associated with plans and investments. The intent is to make it easier for plan sponsors to assess the reasonableness of fees paid in comparison with the provider’s service and performance.

Retirement Plan Benchmarking

ERISA 408(b)(2) Service Provider Rules, as well as, ERISA 404(a), mandate the disclosure of:

  1. Services to be provided
  2. Fees and compensation to be received for performing the services

The Challenge for Plan Sponsors

Plan Sponsors are now required to be sure their fees are ‘reasonable and prudent’.  To do this, the sponsor must understand both the investment market and the complexity of their plan, which can be time-consuming. To meet this challenge, we offer a Benchmarking service that is independent, objective and reasonably priced.

Plan Benchmarking Services

Our national database of plans and information covers not only summarized 5500 data, but also detailed information on fees, investments and services of plans with small to large asset values, including publicly-traded funds, and those offering corporate stock as an investment option.

Begin the process of comparing your plan to other plans of similar size and complexity, from all around the country, by filling out a five minute authorization form.

Service Features

  • Comparison of plan characteristics to real data from over 25 similarly situated plans
  • Custom reports, tailored to each plan’s characteristics
  • Independent and conflict free. You can trust the integrity of the report
  • Compares your plan against current − real plan data from other companies
  • Benchmarks your plan using a number of criteria; fees, services, support and complexity
  • In-depth review of fees and services provided by RKs, TPAs and Advisors
  • Covers plans offering corporate stock as an investment option

Report Features

Plan Service Assessment and Comparison

Your plan is compared to at least 25 other plans with similar services, giving you the knowledge and power to negotiate lower fees.

Services considered include:

  • Advisory/Consultant
  • Recordkeeping
  • Investment Management
  • Managed/Self-directed Accounts
  • Participant Admin/ Communication Services

Plan Fee Assessment and Comparison

Fees are the central focus of your benchmark report. Our report will clearly demonstrate the reasonableness of plan costs.

Reasonableness of Plan Design

Typically, the more complex the plan design, the higher the costs. Our comparison will clarify what you should be paying for your particular design.

Investment Comparison

Benchmarking exposes the fees that make up the expense ratio for investment funds and compares to similar investment asset categories. Expenses to the participant lower the earned rate of return earned.

Timely and Accurate Information

The plan data database is continually updated and broadened. So the information gathered in your comparison is never more than three months old.

Participant Success Assessment

A number of factors determine plan success for participants. Our service uses 10 measures to determine success.