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401(k) Plan Data: Transforming Information into Insights!

Thank you to both John Fitzsimmons and Byran Hallock of Fidelity Workplace Investing for taking the time to join me on the 401(k) Fridays Podcast! During our conversation we shared a lot of insights for employers who are looking to get more from their annual plan reviews than just simple elevator analysis! If you have not had a chance to listen, click the player below.

Now, for this installment of the 401(k) Fridays Fiduciary Fact and Folly!

Numbers, numbers, numbers, data, data data. When I sit in a multitude of conference rooms with my clients and their various service providers and it comes time for the Annual Plan Review or the what ever the naming convention used by the particular service provider is, I generally see one of two things happen, some committee members or meeting attendees get really excited to review the data, and others have the opposite reaction and will subtlety, or sometimes not so subtly sink into their chair and their eyes begin to glaze over as someone sits across the table and reads a bunch of numbers to them. After sitting through hundreds of 401(k) plan reviews, I am not sure that either person I just described is gaining more insight than the other on the decisions points to positively impact their plan, participants and business! For todays fact, your annual plan review contains great data, however until you engage with and connect that data to your specific workforce, plan design and objectives, it is just that numbers in a book.

If like me, you find yourself either frustrated or not really gaining much insight from your 401(k) plan review, here are a few questions items you can can send in advance to your service provider to be prepared with answer to that could lead to a different level of conversation at your next meeting:

  1. If we don’t have time to cover the entire book, what are the five most important items that stand out to you in the review booklet?

  2. Based on other clients that are in a similar business to us, where do you feel our plan is leading, lagging or just keeping pace?

  3. If as a committee, we were to take on a project in the next 12-18 months to improve our 401(k) plan, what are a few suggestions for us to consider?

One of the other items we spent some time talking about was 401(k) plan loans. If you would like a little more background on retirement plan loans, check out the prior podcast called "401(k) Plan Loans, Necessary, Evil or …" episode. If based on an analysis of your plan data, this is an area of concern for you, here are a few questions you may ask your service partners to prepare for based on our discussion that could provide a bit more insight:

Traditional Data

  • How many loans are outstanding

  • What percentage of participants have loans

  • What is the average loan balance

Looking for Insight

  • How many people, or what percentage of people have paid off and then taken a new loan within a 12 month period?

  • What percentage of people with loans are not making 401(k) contributions?

  • What percentage of people with loans are not contributing at a level to reach the full company match?

  • What percentage of people without loans are not contributing at a level to reach the full company match?

  • What is the average contribution rate for people with loans?

  • What is the average contribution rate for people without loans?

  • For those with loans, what is the ratio of the average loan balance to the average account balance?

The goal of these questions is to help identify the impact of loans in your 401(k) plan on your employees' ability to save for retirement. To take things a step further, if through this process, you identify a group of employees who constituently take a loan or are loan abusers you can work with your service partners to provide them with more support with financial wellness strategies such as resources to help create a budget, manage debt, importance of having emergency savings, etc.

In closing, for those of you who are looking to have more meaningful and strategic conversations around your retirement plan, I will paraphrase Albert Einstein, if you continue to do the same things with your annual plan review and 401(k) plan data, its folly to think you will be able to get different results.

If you would like some more personal support to transform information and data into insights in your retirement plan, or if you are getting ready to tackle some big conversations and need help with decisions support tools, send an email to Who knows, we might be able to help!


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