Has your 401(k) plan grown stale?

Be honest. When was the last time you updated your 401k plan design? Five years? 10 Years? 20 Years? Never?

And I’m not talking about rearranging the investment options in your plan menu, I’m talking about the infrastructure of the plan itself.

You know what I mean. Things like your matching strategy, your loan policy, and, yes, even the very framework (i.e., not necessarily the actual investment options) of your investment menu.

If the last time you looked at your plan design the nation was consumed with the debate of what “is” is, then your 401k plan may be due for a major overhaul.

Plenty has changed over the last couple of decades, and we’ve come to discover which plan design elements are stale and which newly discovered plan design elements seem to be the new standard, (see “The Best and the Worst of 401k Plan Design Elements,” FiduciaryNews.com, October 27, 2015).

We’re all aware of the need to update plan documents on a periodic basis whenever laws or regulations change.

In fact, the IRS has an on-line document titles “A Plan Sponsor’s Responsibilities” that includes the following direction to plan sponsors: “Review the plan document for law changes and update it as necessary.”

These aren’t the kind of updates I’m referring to.

Rather, the DOL’s on-line document “Meeting Your Fiduciary Responsibilities,” comes closer to my intent when it states “Employers will want to be familiar with their plan document,… and periodically review the document to make sure it remains current.”

“Remaining current” definitely applies to legal and regulatory changes, but – and this is what I want to emphasize–it further suggests a sense of staying up-to-date with commonly accepted “best practices.”

The term “best practices” is often overused. One thing is clear, though – when it comes to 401k plan design elements, best practices is an evolving concept, a “moveable feast” of ideas that ebb and flow in popularity.

Remember when “best practices” meant three investment options, one for stocks, one for bonds, and one for cash?