Year-End Retirement Plan Review

Key Considerations for Employers

As we approach the end of the calendar year, employers who sponsor retirement plans should take a step back to review how their plans are functioning today and what adjustments may be necessary for the year ahead. This is not simply a compliance exercise; it’s an opportunity to ensure that your retirement plan remains a valuable benefit for employees while also aligning with your organization’s business objectives.

A thoughtful year-end review, guided by an engaged Retirement Plan Consultant, should help you assess your plan’s current state, define where you want it to be in the future, and identify the changes needed to get there.

Start with a Comprehensive Review

A true review goes beyond investment performance. Employers should work with their Retirement Plan Consultant to look holistically at the plan:

• What are your objectives for offering the plan, and are you meeting them?
• How are employees progressing toward retirement readiness?
• Do employees recognize and value the benefit?
• Is our plan design competitive relative to the market?
• Are there compliance issues—such as nondiscrimination testing concerns—that need to be addressed?

For many employers, a third-quarter review (late September)—if you are meeting quarterly with your consultant, as we recommend—is the right time to dive into these questions, so that year-end adjustments can be implemented smoothly as you make the turn into the fourth quarter. Employers who delay may find themselves rushed or unable to adopt beneficial plan design changes until the following year.

Equally important, this review provides a chance to reaffirm the central role of the Retirement Plan Consultant. An engaged consultant acts as the “quarterback” of the plan, coordinating recordkeepers, ERISA counsel, and other service providers to ensure the plan is consistently meeting high standards. Too many employers settle for a transactional advisor relationship—one that merely checks boxes—when what’s truly needed is a proactive partner guiding them through the complexities of plan design and compliance.

Key Plan Design Trends to Evaluate

As part of this review, several plan design considerations are worth evaluating as we head into the new year:

1. Automatic Enrollment and Escalation

Moving toward full automation—automatic enrollment and automatic escalation—has become the industry standard. These features shift the plan from an opt-in arrangement to an opt-out, boosting participation and retirement readiness.  

Legislation has reinforced this trend. Secure Act 2.0 requires all new plans to include automatic enrollment, reflecting its effectiveness in driving retirement readiness. For existing plans, adopting these features not only supports employees but also positions your organization as a forward-thinking employer.

2. Accounting for Part-Time Employees  

Recent legislative changes (Secure Act 1.0 and 2.0) require employers to track hours and extend eligibility to long-term part-time employees. Some sponsors are choosing to allow participation more broadly, both to ease administrative burdens and to reward this important segment of their workforce.

Some employers are opting to go beyond the minimum requirement, granting broader plan access to part-time employees. This can simplify administration, strengthen relationships with a critical workforce segment, and demonstrate a commitment to fairness and inclusivity. For organizations with a significant number of part-time employees, this decision can also serve as a powerful retention tool.

3. Readdressing Employer Contributions  

Several strategies should be on the table:

• Safe Harbor Contributions: Sound Safe Harbor design eliminates the need for annual nondiscrimination testing, ensuring highly compensated employees can contribute fully. While timing can be tight for January 1 implementation, Safe Harbor remains a valuable option for sponsors facing testing issues.
• ‍Student Loan Matching: A more recent innovation, this strategy allows employers to match student loan repayments as if they were plan deferrals. For organizations with younger or highly educated workforces, this can be a strong differentiator in recruitment and retention.
• ‍Profit-Sharing Contributions: Profit-sharing contributions for employees are among the most tax-efficient ways to reward valued team members. Unlike cash bonuses, profit-sharing contributions to the retirement plan are exempt from payroll taxes, making them a cost-effective way to share success with employees while reinforcing the retirement plan’s value.

4. Considering In-Plan Roth Conversions  

Offering an in-plan Roth conversion feature allows participants to convert pre-tax balances into Roth dollars without leaving the plan. This can be an attractive option for employees who anticipate being in a higher tax bracket upon retirement.

However, the tax implications must be carefully explained. Converted balances are treated as taxable income in the year of conversion, and participants cannot use plan assets to cover that tax liability. Employers should ensure employees understand this dynamic and consider offering targeted education on Roth strategies as part of their broader financial wellness programs.

Beyond Plan Design: Communication and Education

Even the best-designed plan runs the risk of falling short if employees don’t understand it or fail to recognize its value. That’s why communication and education are every bit as important as technical plan design.

Employers should consider adopting what’s known as an Education Policy Statement to guide their strategies and plan implementation. Communications should go beyond a simple rollout memo.  

Tailoring messages for different employee groups is critical, as is celebrating plan enhancements so employees appreciate the benefits being provided. Younger employees may be focused on paying off debt, while mid-career staff might want to maximize savings, and those nearing retirement may need guidance on distribution strategies. Targeted, relevant communication helps each group engage more meaningfully with the plan.

Moreover, financial wellness initiatives should extend beyond the 401(k). Addressing topics like budgeting, debt management, and emergency savings can improve overall employee financial stability. Research shows that financially stable employees are more engaged, more productive, and more likely to remain employed with their employer.  

Timing and Next Steps

Timing is critical. Plan amendments typically require at least 30 days to prepare, plus another 30 days’ advance notice to participants. That means employers should be finalizing decisions in mid-October through early November to ensure compliance for January 1 effective dates. Waiting too long can mean missing the window and delaying plan optimizations for another year.

If you haven’t yet engaged in a year-end review with your Retirement Plan Consultant, now is the time. These discussions help ensure your plan is meeting compliance obligations, keeping pace with industry trends, and—most importantly—supporting the retirement readiness of your workforce.

At the end of the day, a well-designed and well-communicated retirement plan is one of the most valuable benefits you can provide. By investing the time now to review and refine your plan, you’re investing not only in the financial futures of your employees, but also in the long-term success of your organization.