Benchmarking your retirement plan provider isn’t just a best practice — it’s a fiduciary obligation. Whether you're evaluating fees, exploring new service options or responding to a provider consolidation, understanding how and when to launch a request for proposal (RFP) or request for information (RFI) is essential.

At a companion webinar to AFP's Request for Proposal (RFP) 401(k) Bundled Plans and Pooled Employer Plans (PEPs), a panel of experts discussed the factors every plan sponsor should consider. Below are key takeaways from their discussion.

1. As a plan sponsor, you have a fiduciary obligation under ERISA to ensure that fees are reasonable and services meet the needs of the plan.

Whether your plan is a 401(k), 403(b) or 457, if you’re the plan sponsor and have discretion over plan assets, you’re responsible for ensuring the fees and services are reasonable under the Employee Retirement Income Security Act (ERISA) regulations. The best way to do that? Conduct an RFP process. It gives you strong comparatives and allows you to test the market — just like you would with other employee benefit plans.

What do we mean by “reasonable”? That depends on the outcome of the RFP.

“Reasonable does not mean cheapest,” said Shelly Howard-Horwitz, Managing Director at World Investment Advisors. “It means aligning fees with the value you and your participants receive. The real question is whether the services justify the cost.”

2. Most plan sponsors lack a clear understanding of all the fee components — especially revenue sharing.

Most plan sponsors aren’t fully aware of where all the fees come from, who they’re paying and how much. Fees generally fall into three main categories:

• Administrative fees, e.g., recordkeeping, compliance, employee communications
• Investment fees, typically borne by participants
• Advisor or consultant fees, paid by the sponsor, participants or both

A critical component of this is understanding revenue-sharing arrangements and how those dollars are credited. “Less than one in five plan sponsors actually understand how revenue sharing is credited,” said Howard-Horwitz. “Without that knowledge, it is impossible to assess whether the fees are reasonable. This is the kind of blind spot that puts fiduciaries at risk.”

3. The RFP process also ensures documentation of fiduciary due diligence.

Regulators and courts look for evidence of fiduciary due diligence — and if it’s not written down, it didn’t happen. “If you haven’t documented it, did it even happen?” said Howard-Horwitz. “From the perspective of the IRS, Department of Labor and possibly litigation, the answer is no.” Having a clear, measurable and well-documented process is essential protection for your organization and your plan participants and is your best defense in proving fiduciary due diligence.

4. Mini-RFPs are suitable for smaller plans; full RFPs are better for large or complex plans.

The decision to use a mini-RFP or a full RFP process often comes down to the size and complexity of the plan. For smaller retirement plans — typically those with a few hundred participants or less and less than $3 million in assets — a mini-RFP or even an RFI can be an effective and efficient way to benchmark fees, services and investment options. With fewer participants and less administrative complexity, these plans can benefit from a simpler approach, such as sending RFIs to a small group of providers to compare basic offerings and costs.

In contrast, larger and more complex plans benefit most from a full RFP process as they often have more intricate needs — multiple investment options, diverse participant demographics, intricate fee structures — that may require more comprehensive benchmarking, as well as greater fiduciary oversight and focus on participant education and support.

5. Plans should issue an RFP every two to three years — or after major changes — to ensure fees and services remain competitive and compliant.

With constant industry changes — like recordkeeper consolidation, new legislative requirements and rapid innovation — plans should issue an RFP every two to three years, or after any major event such as a merger, acquisition or significant shift in plan size (such as a 20% or greater change in assets or participants). If your provider is acquired or major changes occur, it’s crucial to review your options within six to nine months to ensure services and fees remain competitive and compliant.

“You didn’t hire [the acquiring record keeper], so that RFP is your opportunity to confirm that the services still match what you signed up for and what your plan needs,” said Howard-Horwitz.

Routine RFPs also ensure you stay on top of new offerings, industry best practices and compliance, helping protect both plan participants and sponsors. “You have to protect the participants first, and then you’ve got to protect the plan sponsor — in that order,” said Howard-Horwitz. Even if a full RFP is not immediately feasible, benchmarking your current provider and competitors is important for effective fiduciary oversight.

6. Pooled Employer Plans (PEPs) offer economies of scale for small and mid-sized plans and reduce fiduciary liability for sponsors.

PEPs function as a “co-op for 401(k) plans,” allowing small and mid-sized companies to access the same institutional pricing and benefits typically reserved for large corporations. “You get the pricing structure of a Fortune 500 company even if you’ve only got 50 employees,” said Gloria Griesinger, CEO & Founder of Gsquared Consulting.

By pooling together with other plans, smaller employers gain access to premium investment options, advanced technology platforms and superior service levels they couldn't afford individually, essentially creating, as Griesinger described it, a “Costco-style access to high-quality retirement benefits — more for less.”

Plus, when a company joins a PEP, much of the fiduciary burden transfers from the plan sponsor to the pooled plan provider. This is particularly valuable for companies lacking dedicated investment committees or internal expertise to properly oversee plan investments and operations.

“If you haven’t at least explored a PEP, you could be missing an important opportunity as a fiduciary,” said Griesinger.

7. Include key stakeholders in the RFP process to ensure fiduciary responsibilities are met and well-documented.

Effective RFP processes require input from multiple stakeholders with different areas of expertise. At minimum, HR and treasury should participate, with the committee expanding based on company size — larger organizations may include finance, the CFO and external investment advisors who bring specialized 401(k) knowledge that internal teams typically lack. “It really is a team effort,” said Tom Wolfe, Manager of Treasury for Third Lake Solutions.

Stakeholder inclusion should be meaningful and documented. Committee members need to understand their fiduciary obligations and actively participate; sending proxies or missing meetings creates compliance risks. “During audits, the DOL pays close attention to who attended the meetings,” said Griesinger.  

And formal training should be provided to all committee members — with documentation of that training. For example, create a paper trail by distributing meeting materials in advance with clear expectations for review. Showing the committee took their responsibilities seriously is critical protection, as members can, according to Wolfe, “be held personally liable” for fiduciary breaches.

For more in-depth guidance, fill out the form below to download AFP's Request for Proposal (RFP) 401(k) Bundled Plans and Pooled Employer Plans (PEPs), which is designed to help plan sponsors evaluate and select a retirement plan provider with confidence and transparency.

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