What is a Non-Profit Retirement Plan Benchmark?

The plan design is the Investment Policy Statement (IPS) and the type of plan chosen such as 401(k) or 403(b). The type of plan will determine what the plan can or cannot do such as:

- Vesting period

- Contributions limits

- Eligibility for the plan

- Testing requirements

- Administration requirements

When reviewing the plan's performance, the investment policy statement will be taken into consideration. This document establishes the guidelines:

- Risk tolerance

- Investment funds

- Investment objectives

- Any investment constraints

- How the investments will be monitored and managed

The evaluation will ensure the IPS is being followed appropriately. In addition, the specific funds held for investment will be assessed.

The funds will be analyzed to determine:

- How well are the funds performing

- Are the risk/return factors appropriate

If a fund's quality starts to diminish, it will be put on the "watch list" to alert the financial advisor to a potential issue within the lineup.

If funds are rated poorly, due to poor performance, too much risk, too high fees, or other qualities, it will alert the advisor a change is needed.

Evaluating a retirement plan's health will combine several pieces of the assessment to determine overall how is your plan doing. This combines the:

- Plan fees

- Liability risk 

- Investment performance

When you combine all of these pieces compared to your competitors' plans, you will receive a rating that alerts you to how well or how poorly your plan is doing.

Your advisor should be able to share areas of improvement or confirm your plan is on the right path.

Fees for retirement plans can vary greatly depending on the:

- Vendors used

- Type of plan chosen

- Size of your organization

A SIMPLE IRA will be less expensive due to fewer administrative and regulatory requirements as compared to a 401(k). In addition, contribution matches can vary widely along with eligibility requirements and other plan features.

The size of your organization will impact fees because as your organization grows, it may be required to change plan designs. For example, once you are over 100 employees, your organization will no longer be able to have a SIMPLE IRA.

If it changes to a 401(k), it will be required to have an annual audit which will add additional fees to your plan.

The vendors used will vary their costs. These variations can be due to:

- Customer service asdfasdf

- Services available

- Technology platforms

However, an evaluation will take into consideration the vendors available for plans similar to your size and will alert you to any potential alternatives available to lower your fees.

When benchmarking the plan, the financial advisor will review your plan's fees and compare them to other similar plans on the market. This will determine if you are being overcharged.

If a retirement plan is not properly administered correctly or follows appropriate government regulations, it can put an organization at risk, especially if the organization itself is required to act as a fiduciary.

An assessment of the plan's liabilities will review the fiduciary's actions to ensure proper procedures are being followed, documents are being filed timely, and the plan is in compliance.

A fiduciary is to act solely in the interest of the participants and their beneficiaries. If a fiduciary is not acting accordingly, they can be sued for breaching duties.

Typical fiduciary responsibilities include:

- Diversifying plan investments

- Following the plan documents

- Defraying reasonable expenses of the plan

- Carrying out duties with care, skill, prudence, and diligence

Acting solely in the interest of the participants and their beneficiaries

- Acting for the exclusive purpose of providing benefits to workers participating in the plan and their beneficiaries