The midpoint of the year is one of the most strategic times for business owners and plan sponsors to conduct a detailed 401(k) plan review. With the first half of the year’s data available and sufficient time to implement changes before year-end deadlines, a mid-year review helps ensure your plan is aligned with both regulatory expectations and participant retirement goals.
At Holland Capital Management, a registered investment adviser with a fiduciary-first approach, we guide sponsors through a methodical review of plan structure, investments, compliance, and service providers. This ensures that each component of the plan supports a well-documented and carefully monitored framework for both your company and your employees.
Whether your plan serves ten people or ten thousand, a proactive mid-year review can identify potential issues, refine plan operations, and highlight areas where adjustments may support participant decision-making.
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Evaluating Your 401(k) Plan Design
Assessing Current Plan Features
Begin by reviewing the retirement accounts plan’s current structure. Are deferral limits optimized? Is the plan designed to encourage both Roth contributions and traditional pre-tax deferrals? These questions are particularly relevant for high-income employees who may benefit from tax diversification or want to reduce future RMDs.
Double-check eligibility, vesting schedules, and matching formulas. Are these elements aligned with employee needs and business goals? Has your workforce changed significantly since the plan was last updated? If so, it may be time to consider a design that supports retention, recruiting, or succession planning.
Considering Plan Amendments for Better Outcomes
July is an ideal time to review whether you need to amend your plan document before year-end. Plan amendments often require board approval, compliance testing, and timely communication with participants. Common updates include:
- Adding automatic enrollment or auto-escalation features
- Adjusting contribution limits or thresholds for safe harbor compliance
- Enabling Roth IRA contributions inside the plan
A mid-year review helps ensure these changes are evaluated with adequate time for implementation, without rushing decisions late in Q4.
Analyzing Fees and Service Providers
Reviewing Fee Structures and Comparisons
One of the most important fiduciary responsibilities is to monitor the reasonableness of plan fees. This includes recordkeeping costs, advisory fees, and investment expense ratios. Comparing your plan’s fees to industry benchmarks can provide context for evaluating cost and service alignment.
Evaluate whether your financial advisor or registered investment adviser is fulfilling their fiduciary obligations to the plan. Do they provide investment oversight, participant education, or quarterly benchmarking? Are they transparent about all revenue-sharing arrangements?
Evaluating the Performance of Service Providers
Aside from cost, service quality matters. Are your providers responsive? Do they help with IRS compliance, plan audits, or error correction? If participant support is lacking or compliance has been reactive rather than proactive, now is the time to explore better-aligned partners.
Holland Capital Management offers objective vendor comparisons and process reviews to help sponsors assess whether their service providers are supporting the plan’s administrative and fiduciary requirements.
Investment Performance and Asset Allocation
Benchmarking Fund Performance Against Peers
Compare the performance of your plan’s core investment menu—including target-date funds, equity options, and fixed income choices—against both internal benchmarks and peer groups. Evaluate both one-year and longer-term performance, and ensure the risk-return profile remains appropriate for your employee demographics.
Strategic Asset Rebalancing Tips
Rebalancing isn’t just for participants—it’s also essential at the plan level. Mid-year is a good time to assess whether your investment strategies remain aligned with participant behavior and overall market conditions. Are default investment options still appropriate? Should new funds be added or underperforming ones replaced?
A fiduciary-focused financial advisor can help you document the Investment Policy Statement (IPS) review process and evaluate whether adjustments are warranted ahead of year-end testing.
Conclusion
Running a mid-year 401(k) review is more than a best practice—it’s a strategic opportunity to identify operational risks, strengthen fiduciary oversight, and evaluate plan design features before the second half of the year. From reviewing your plan document and beneficiaries to optimizing Roth deferrals and evaluating fees, a July review lays the foundation for better decisions before the year closes.
At Holland Capital Management, we support business owners and plan sponsors through proactive, fiduciary-aligned guidance—bringing clarity, confidence, and compliance to your retirement plans.
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Frequently Asked Questions
What items should be included in a mid-year 401 (k) review checklist?
A mid-year 401(k) review checklist should include evaluating investment performance, assessing employee participation rates, checking compliance with regulations, reviewing plan fees, and ensuring proper documentation. Additionally, confirm that participant communication is effective and analyze any changes in company demographics or workforce needs that may affect the plan.
What’s the most essential part of a mid-year 401(k) review?
While each section matters, most plans benefit from re-evaluating investment strategies, verifying participant deferrals, and reviewing fee structures against current benchmarks.
How often should plan documents be reviewed?
A full review of your plan document should occur annually or whenever there’s a significant change to your business structure, employee demographics, or regulatory environment.
Is now a good time to add Roth features to my 401(k)?
Evaluating Roth integration mid-year can provide adequate time for analysis, planning, and participant communication before year-end.
What should I look for in my investment menu during the review?
Focus on performance vs. benchmarks, risk-adjusted returns, and turnover. You should also assess whether each fund option supports your participant demographics and long-term retirement goals.
