Tag Archives for 401(k)

Adding 401(k) Plans Whose Plan Year Begins in Q2, Q3, or Q4

The OnlyBoth/Benchmine engines will now include 401(k) plans whose plan year begins in Q2, Q3, and Q4. We will start with the plans in the $1B+ assets bracket, and update all the seven assets brackets in the coming days.

When first applying to 401(k) plans the OnlyBoth AI-powered  technology for comparative performance analytics & reporting, we opted to limit the scope of the BenchMine tools to plans whose plan year began in Q1 (Jan-Mar), which covered about 95% of them. Our reasoning was that a one-year comparison of plans starting in Q1 to plans starting, say, in Q3 would not be a fair comparison, because highly external factors such as the stock market could lead to, say, an inferior performance during that calendar year but a superior performance during the next (or previous) year. Enlarging the comparison to multiple years could make it less unfair but would obscure the yearly plan performance.

This author appeared on a panel on Benchmarking Investments and Fees at the 2025 PLANSPONSOR National Conference in Chicago. In the audience was a plan advisor who, after the panel ended, came to offer compliments on the free and open tools available at BenchMine.com. During a subsequent conversation, the advisor asked about a plan that was not in the BenchMine data, and I checked and answered that its plan year began in Q2. After further discussion, I began to wonder: “Can such plans be included while making adjustments to minimize the unfair comparisons?”. After some deliberation, the answer turned out to be “Yes”.

Here are the key steps to the inclusion approach. 

  1. First, add the symbolic attribute “plan year began in”, with possible values Q1, Q2, Q3, or Q4 to every plan.  This will enable doing simple searches at the Discovery Engine such as “List the Q2 plans by highest total administrative expenses.”
  2. However, prevent this new attribute from being used within benchmarking insights, e.g., “This plan had the highest total administrative expenses of all the Q2 plans in the Manufacturing sector.” which seems less insightful or interesting than other peer comparisons.
  3. Identify those plan measures that are most sensitive to external factors. We selected the measures that involve earnings, income, and yield.
  4. For Q2, Q3, and Q4 plans, replace those sensitive measure values with N/A, to avoid comparisons to other plans with a different Q (quarter).  However, let users easily see the values in the plan’s profile, which will state something like “net income ($X, but changed to n/a because the value of ‘plan year began in’ must equal ‘Q1’).”

Note that for plan years that begin in Q2, Q3, or Q4, performance measures relating to earnings, income, and yield will not be used for comparison in the Benchmarking Engine. This means that the Scoring Engine results for such plans will be less comprehensive, since the benchmarking scores for such plans will rely on administrative and operational aspects such as expenses, contributions, asset diversity, balances, liabilities, corrective distributions, insurance coverage, and possible fraud.

We believe that the above approach will bring added value to the benchmarking of 401(k) plans, while minimizing the introduction of unfair or misleading comparisons.

Raul Valdes-Perez

New Benchmine Measure to Compare Investment Returns of Employer 401(k) Plans

Benchmine.com, provided by OnlyBoth, launched in late November a free, open-to-all website for comparing the performance of 55,000+ employer 401(k) plans, offering many novel analytic capabilities to users.

The federal data source (Department of Labor EBSA) reports many core measures of 401(k) plans, leaving it to users of the data to introduce derived measures that better enable broad performance comparison across plans of different sizes. This led to our incorporating total administrative expense ratio, defined as total administrative expenses (Line 2i(5)) divided by total assets (Line 1f), times 100. Note: all data sources referenced here are from Schedule H.

The Benchmine 401(k) engines needed a measure of plan-year investment returns that likewise enables fair comparison. The federal data reports on total income and net income during a plan year, but these include employer and participant contributions and rollovers, which tend to skew the returns on investment. Also, plans sometimes transfer investment assets out of, or into, the plan, which also complicates fair comparison.

After consulting 401(k) industry experts, we decided on a new measure yield on beginning-of-plan-year total assets (yield for short), defined as net earnings on investments (the sum of the 10 column (b) entries from section 2b minus investment advisory and management fees from Line 2i(3)) divided by total assets at the beginning of the plan year (Line 1f(a)), times 100. By itself, this doesn’t deal with the complications of mid-year asset transfers (section 2l), so we added a qualifying criterion that a plan’s asset transfers (incoming + outgoing) be less than 1% of its total assets at the beginning of the plan year. This prerequisite disqualifies about 5% of the 55,788 401(k) plans at Benchmine, which then get a value of N/A for their yield.

These three CY 2021 examples of employer 401(k) plans (names omitted here), from different total-assets brackets, stand out on their joint yield and administrative expenses:

  • Only PLAN (within the $10M-$50M bracket) has both such a high total administrative expense ratio (1.716%) and such a low yield (11.70%).
  • In California with its 209 ($250M-$1B) plans, only PLAN has both such a high yield (18.31%) and such a low total administrative expense ratio (0.002%).
  • PLAN has the highest total administrative expense ratio (0.360%) among the 196 ($100M-$250M) plans that have 1,000 to 4,999 total participants and have at least a 16.66% yield.

In conclusion, Benchmine is now equipped with good measures for both administrative expenses and investment returns, all in the service of enabling fair comparison, heightening performance transparency, helping to drive improvement, and empowering participant choices.

Raul Valdes-Perez

Infusing Performance Transparency into Employer 401(k) Plans

OnlyBoth is proud to infuse unprecedented performance transparency into the world of employer 401(k) plans, about 55,000 of them, in partnership with DCIIA.org, by applying a unique AI-based technology for comparative analytics (e.g., benchmarking) to the latest, completed EBSA 5500 and Schedule H data. DCIIA is offering this service as a member benefit.

Visit this DCIIA page for an introductory video as well as a series of ten brief explainer videos that illustrate how you can discover answers to the following questions about 401(k) plans:

  1. Where does a plan stand out from related peer groups?
  2. How does a plan compare to a user-selected peer group?
  3. What’s best in class, i.e., the best achievement on a given measure by a similar plan?
  4. How does a plan score compare to all others in the same industry?
  5. How do up to 10 plans compare side-by-side?
  6. What are the overall top- or bottom-scoring plans?
  7. What are the ranked scores for a group of plans selected by industry or geography?
  8. What are the top benchmarking insights for a group of plans that I select?
  9. What are the top benchmarking insights that mention specific data attributes?
  10. What plans match the characteristics, measures, and/or geography that I select?