Written by: Steven Levenson
A 401(k) plan is one of the most valuable benefits an employer can offer. Not only does it help attract and retain top talent, but it also plays a vital role in supporting employees' long-term financial well-being. Yet, the true success of a retirement plan depends on more than just setting it up, it requires ongoing stewardship, especially as participation grows and assets accumulate.
The Importance of High Participation Rates
High participation rates are one of the clearest indicators of a healthy 401(k) plan. When most employees are contributing, it signals that they see value in the benefit, and it strengthens retirement readiness across the organization. From an employer's perspective, strong participation also helps the plan pass nondiscrimination testing, reducing the risk of refunds to highly compensated employees.
Encouraging greater participation doesn't happen by chance. It often requires proactive communication, automatic enrollment or escalation features, and thoughtful plan design. Employers who take these steps demonstrate a commitment to their employees' financial futures and that builds loyalty.
If you're unsure whether your current plan design is maximizing participation, Western Financial can help. Schedule a consultation to review your plan and uncover small adjustments that could drive big improvements in engagement and savings.
The Role of Fiduciary Stewardship
Offering a 401(k) also comes with responsibility. Employers act as fiduciaries, meaning they are required to act in the best interest of participants. That responsibility can feel overwhelming but you don't have to shoulder it alone.
At Western Financial Corporation, we serve as a 3(38) fiduciary on behalf of our clients. This means we take the responsibility of selecting, monitoring, and adjusting the plan's investments, shifting much of the fiduciary burden off the plan sponsor and onto our shoulders. By doing so, employers gain peace of mind knowing that professionals are continuously overseeing their plan in the best interest of participants.
As assets in the plan grow, the plan itself can evolve. A provider that was a good fit in the beginning may not always be the right fit as the plan matures. Recordkeepers and third-party administrators (TPAs) often have different pricing models depending on plan size, and costs that were competitive at $1 million in assets might not be as competitive at $5 million. This is why periodic reviews are critical.
Reviewing Investments and Costs
It’s equally important to regularly review the investment options in the plan. Fund share classes, expense ratios, and performance can all change over time. Plans that are not monitored may end up holding higher-cost funds or funds that no longer meet performance expectations. These costs directly impact participants by reducing their retirement savings over time
As a 3(38) fiduciary, Western Financial Corporation provides complimentary benchmarking reports that compare your plan against others of similar size and industry. This gives you a clear picture of where your costs stand and whether adjustments could improve outcomes for both your company and your employees.
Growing with the Plan
A successful 401(k) is not static. As participation increases and assets build, the plan should be revisited to ensure it continues to serve employees effectively. Employers who embrace this mindset are not just offering a retirement benefit, they are actively stewarding a program that can have a lasting impact on their employees’ futures.
By focusing on participation, leveraging the support of a 3(38) fiduciary, and regularly benchmarking costs and investments, employers position their plans and their employees for long-term success. That’s what it means to be a good steward of your 401(k).
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