For HR and Finance leaders at mid-sized employers, selecting and evaluating 401(k) plan providers is a recurring, high-stakes responsibility. The Department of Labor (DOL) recommends that plan sponsors review their 401(k) providers annually if plan assets are used to pay plan fees, and at least every three years with other arrangements (benefitnews.com). This ongoing scrutiny is not just compliance-driven—it’s central to protecting participants’ retirement outcomes and the company’s fiduciary standing. A modern 401(k) platform such as Basic Capital supports this evaluation process by offering transparent fees, strong participant education, and goal-driven plan design.

Set the Decision Up Front: Objectives, Scope, and Team Roles

A structured approach to 401(k) provider selection criteria helps employers reduce risk and meet regulatory requirements.
The DOL recommends employers review their providers at least every three years to verify performance and fee reasonableness.

Establishing clear objectives, timelines, and roles—such as designating HR and Finance leads, and an executive sponsor—keeps the evaluation focused and auditable. Assembling required artifacts like a criteria document, demo script, scoring sheet, and decision memo early in the process supports transparent decision-making and smooth collaboration. For more on building your decision-making process, see Top 401(k) Providers for Mid-Sized Employers in 2025: What to Compare.

Criteria & Weights: What Matters Most in Provider Evaluation

Evaluating providers requires a disciplined, criteria-based approach. Key considerations for 401(k) plan comparison include:

• Fee structure and transparency: Even a 1% increase in fees can reduce a participant's account balance by up to 28% over 35 years (journalofaccountancy.com). Small fee differences can have a major long-term impact.

• Investment options: Assess diversity and performance, and compare returns to industry benchmarks to spot any consistent underperformance.

• Support and service model: From implementation to ongoing administration, continuity and clear support channels are vital.

• Plan flexibility: Features like eligibility, vesting, and profit sharing.

• Compliance and governance: Ongoing guidance for filings and regulatory changes.

• Cybersecurity measures and technology: Evaluate cybersecurity protections and mobile access features to keep participant data secure and accessible.

The DOL points out that fee differences, even if small, can translate into significant differences in returns over time (dol.gov).

For a deeper look at these criteria and how to weigh them, see Best 401(k) Providers for Mid-Market Companies (Fees, Flexibility, Support).

Running Provider Demos: Questions, Red Flags, and Documentation

It’s common for mid-sized employers to feel overwhelmed by demo meetings and sales pitches.
Industry experts recommend benchmarking and using a thorough Q&A script to keep provider demos focused on substance (mployeradvisor.com).

Must-ask questions include:

• How are fees split between employer and participant?

• Who owns compliance testing and annual filings?

• What support is provided during migration, and who staffs the process?

Red flags include vague answers on fees, deferred or “wrap” charges, and unclear service timelines. Inadequate participant support or burdensome manual processes are also warning signs to watch for during demos. Documenting all responses and comparing them side-by-side is a best practice.

Reading Proposals Side-by-Side: Normalizing Assumptions and Total Cost

A side-by-side proposal review is the best way to identify hidden costs and differences in provider offerings.

Fee transparency is critical to avoiding hidden costs—revenue sharing, wrap fees, and asset-based charges are among the most common issues noted by the DOL (dol.gov).

According to ERISA experts, normalizing all proposal assumptions and comparing them in a standardized worksheet is the most reliable way to avoid overlooking hidden fees. Proposal normalization—standardizing all disclosures for apples-to-apples comparison—empowers mid-sized employers to make informed decisions. For more, see 401(k) Plan Fees Explained: How Costs Scale as Your Business Grows.

Final Alignment: Scoring, Risk Notes, and Board-Ready Memo

After comparing demos and proposals, scoring each provider against weighted criteria helps clarify the best fit.
Documenting your process and recommendations for leadership is a fiduciary best practice.

Maintaining written records of your selection rationale is a fiduciary standard recognized across the industry. The DOL advises keeping detailed records of provider reviews and rationale for selections (dol.gov). Include a summary of risks, notes on any unresolved issues, and a draft memo ready for board review. For practical templates, visit How to Build a 401(k) RFP That Gets Real Responses (+ Downloadable Template).

Real-World Lessons: Case Studies in Provider Evaluation

Switching or optimizing a provider can yield tangible benefits.
Industry reports show that employers who regularly review and, if necessary, change 401(k) providers can achieve significant cost savings and improved plan performance (mployeradvisor.com).

For example, a comprehensive plan review may identify underperforming investment options and excessive fees, leading to better retirement outcomes for participants. Regular benchmarking against industry standards helps identify improvement opportunities.

While specific mid-sized employer case studies are limited, these best practices are broadly applicable. For more insights, see Largest 401(k) Providers: What Mid-Market Employers Should Know.

Best Practices, Risks, and Red Flags for Mid-Sized Employers

It’s tempting to believe that all providers disclose fees transparently, but hidden charges are common.
The Department of Labor warns that revenue sharing, wrap fees, and asset-based charges can erode participant returns if not carefully monitored (dol.gov).

The most common hidden fees include revenue sharing, wrap charges, and asset-based costs. The smart move? Clarify all fee arrangements up front, demand transparency, and document every aspect of the evaluation process. For a practical checklist of hidden fees and compliance risks, see A Practical Guide to 401(k) Fee Disclosures for Employers.

Next Steps: Tools and Resources for Confident Provider Selection

A disciplined process, supported by actionable tools, leads to confident provider selection.
The DOL provides a model chart for investment option comparison, and several industry organizations offer RFP templates for employers (dol.gov). Use worksheets and side-by-side review tools to standardize your evaluation and support your committee’s decision.

Commit to regular plan evaluations and participant education to maintain long-term plan health.

References

BenefitNews. (n.d.). How to regularly review 401(k) providers. https://www.benefitnews.com/opinion/how-to-regularly-review-401-k-providers

Department of Labor. (n.d.). Meeting Your Fiduciary Responsibilities. https://www.dol.gov/node/63357

Journal of Accountancy. (2018). 401(k) plan features: A guide for CPAs. https://www.journalofaccountancy.com/issues/2018/oct/401k-plan-features/

MployerAdvisor. (n.d.). As an employer, how often should I review my 401(k) advisor? https://mployeradvisor.com/blog/as-an-employer-how-often-should-i-review-my-401-k-advisor

This content is for informational purposes only and is not legal, tax, investment, or compliance advice.