Fees, Fiduciary Support, and Participant Experience

Choosing the right 401(k) provider is one of the most important financial decisions an employer can make. As we move into 2026, expectations for retirement plans are higher than ever—from fee transparency and fiduciary protection to technology and employee engagement.

If you’re evaluating your current plan or considering a new provider, here’s what truly separates a top-tier 401(k) provider from the rest.

Why Choosing the Right 401(k) Provider Matters

A 401(k) plan is more than a benefit—it’s a long-term commitment to your employees’ financial future and your company’s compliance responsibilities.

The right provider can:

• Reduce fiduciary risk

• Improve employee participation and retirement readiness

• Lower overall plan costs

• Save employers time through better support and administration

The wrong provider can lead to hidden fees, compliance issues, and disengaged employees.

Transparent and Reasonable 401(k) Fees

Clear Fee Disclosure (No Surprises)

One of the biggest red flags in a 401(k) plan is unclear or layered fees. Top 401(k) providers prioritize transparency, ensuring employers understand:

• Administrative fees

• Investment expense ratios

• Advisor or fiduciary fees

Everything should be clearly disclosed—without confusing language or buried costs.

Value Over “Cheapest Option”

Low fees matter, but the cheapest plan isn’t always the best plan. A quality provider balances cost with services like fiduciary oversight, employee education, and compliance support. Paying slightly more for the right structure can save significant money—and risk—over time.

Strong Fiduciary Support and Compliance Expertise

ERISA Fiduciary Protection

A top 401(k) provider helps employers meet their ERISA responsibilities and often offers:

• 3(21) or 3(38) fiduciary services

• Investment oversight and monitoring

• Documentation to support fiduciary decisions

This protection is critical as regulations and litigation risks continue to increase.

Proactive Compliance Guidance

Rather than reacting to problems, great providers help prevent them. This includes:

• Ongoing plan reviews

• Support with nondiscrimination testing

• Help navigating regulatory changes

Compliance should feel supported—not stressful.

A Better Experience for Plan Participants

Employee Education That Actually Works

Top providers understand that a 401(k) only succeeds if employees use it. Look for providers that offer:

• One-on-one retirement guidance

• Educational workshops or webinars

• Easy-to-understand resources

When employees feel confident, participation and contribution rates rise.

User-Friendly Technology and Tools

Modern employees expect modern tools. A strong 401(k) provider offers:

• Intuitive online dashboards

• Mobile access

• Simple enrollment and contribution changes

Ease of use plays a major role in long-term engagement.

Personalized Service and Ongoing Support

Dedicated Plan Support

Employers should never feel like just another account number. Top 401(k) providers offer:

• Dedicated plan contacts

• Fast response times

• Clear communication

This level of service is especially valuable during audits, employee transitions, or plan changes.

Strategic Plan Design Assistance

The best providers go beyond administration by helping employers:

• Design competitive employer matches

• Improve participation rates

• Align the plan with business goals

A well-designed plan benefits both employees and the company.

How to Evaluate Your Current 401(k) Provider

Ask yourself:

• Do we fully understand our fees?

• Are we confident in our fiduciary protection?

• Are employees engaged with the plan?

• Do we receive proactive guidance and support?

If the answer to any of these is “no,” it may be time for a review.

The Advantage of Working With an Independent 401(k) Advisory Firm

One of the most common concerns employers have when reviewing their 401(k) plan is the fear of disruption. Many assume that working with a new advisor automatically means switching providers—but that isn’t always the case.

As an independent 401(k) advisory firm, we are not tied to any single recordkeeper, investment platform, or product provider. That independence allows us to work with virtually any 401(k) provider, giving employers flexibility and options—without unnecessary changes.

No Provider Change Required

If your current 401(k) provider is a good fit operationally, there may be no need to switch. Instead, an independent advisor can:

• Evaluate your existing plan structure

• Review fees and investment lineups

• Enhance fiduciary oversight and documentation

• Improve employee education and engagement

All while keeping your current provider in place.

Unbiased Advice in Your Best Interest

Because independent firms are not incentivized to promote one provider over another, recommendations are based solely on what’s best for your plan and your employees. This results in:

• Objective plan evaluations

• Transparent fee analysis

• Solutions tailored to your company’s goals—not a sales quota

Flexibility Now and in the Future

Independence also means flexibility as your business grows. If your needs change over time, you’re not locked into a single provider ecosystem. Instead, you have the freedom to evolve your plan—on your timeline, not someone else’s.

Choosing a 401(k) Provider for 2026 and Beyond

A top 401(k) provider doesn’t just offer a plan—they offer partnership, protection, and peace of mind. As retirement planning continues to evolve, employers need providers who are transparent, proactive, and focused on both compliance and employee success.

If you’re unsure whether your current plan measures up, a professional 401(k) review can help identify opportunities to improve outcomes for both your business and your employees. Schedule a complementary review today! 

As 2025 comes to a close, it’s the perfect time to review your 401(k) and make strategic adjustments for 2026. Whether you’re a seasoned investor or just getting started, taking proactive steps now can help maximize your retirement savings, optimize your tax benefits, and ensure your investments align with your long-term goals.

Here are five 401(k) strategies to start planning today.

1. Maximize Your Contributions

Know the 2026 Contribution Limits

For 2026, the IRS has increased the 401(k) contribution limits. Individuals under 50 can contribute up to $23,000, while those 50 and older can make catch-up contributions up to $30,500. Review your current contributions and consider increasing them to take full advantage of these limits.

Take Advantage of Employer Matching

If your employer offers a matching contribution, make sure you’re contributing enough to receive the full match. Employer matches are essentially free money that can significantly boost your retirement savings over time.

2. Review and Rebalance Your Investment Allocation

Assess Your Risk Tolerance

Your investment allocation should reflect your age, retirement timeline, and risk tolerance. If your current allocation feels too conservative or too aggressive, now is the time to adjust.

Rebalance Your Portfolio

Market fluctuations can shift your asset allocation over time. Rebalancing ensures your portfolio stays aligned with your goals and helps manage risk effectively.

3. Consider Roth vs. Traditional 401(k) Options

Understand Tax Implications

A Roth 401(k) allows you to pay taxes now and withdraw funds tax-free in retirement, while a Traditional 401(k) offers tax-deferred growth. Evaluate which option fits your current tax situation and retirement goals.

Split Contributions Strategically

Some investors benefit from splitting contributions between Roth and Traditional accounts, diversifying their tax exposure in retirement.

4. Plan for Life Changes

Adjust for Career or Family Events

Marriage, children, job changes, or significant income changes can affect your contribution strategy. Update your 401(k) contributions to reflect your current financial situation and long-term goals.

Update Beneficiaries

Life changes may also require updating your beneficiary designations to ensure your retirement savings are distributed according to your wishes.

5. Minimize Fees and Optimize Investments

Review Plan Fees

401(k) plans often include management or administrative fees. Reviewing your plan’s fees and choosing low-cost investment options can improve your long-term returns.

Explore Diversification Opportunities

Consider diversifying your 401(k) investments across stocks, bonds, and target-date funds. A well-diversified portfolio can help manage risk and support growth in varying market conditions.

Final Thoughts

Starting your 401(k) planning for 2026 now can make a big difference in your retirement savings. By maximizing contributions, rebalancing your portfolio, considering Roth vs. Traditional options, planning for life changes, and minimizing fees, you can set yourself up for a stronger financial future.

If you need personalized guidance, contact our team at Cornerstone Portfolios to review your 401(k) strategy and ensure your retirement plan is on track for 2026 and beyond.

As the year comes to a close, employers face critical deadlines and responsibilities related to their 401(k) plans. From ensuring compliance to maximizing employee contributions, year-end planning is essential for both fiduciary protection and employee satisfaction.

Top 401(k) providers emphasize a proactive approach to year-end planning, helping employers navigate tasks efficiently and confidently. Here’s how the experts prepare companies for a smooth year-end.

Conduct a Comprehensive Plan Review

Check Contributions and Participation

Top providers start with a thorough review of employee and employer contributions:

• Ensure employees are maximizing their deferrals within IRS limits

• Confirm employer matching contributions are accurate

• Identify employees who may need reminders or guidance

Reviewing contributions early helps avoid surprises and ensures employees can take full advantage of their retirement savings opportunities.

Evaluate Investment Options

Providers also review plan investment menus for performance and suitability:

• Compare fund performance against benchmarks

• Assess target-date funds and diversified options

• Identify underperforming or high-fee investments

A well-reviewed investment lineup supports employees in meeting their retirement goals.

Ensure Compliance and Fiduciary Oversight

Conduct Year-End Testing

Compliance testing is a key focus at year-end. Top 401(k) providers guide employers through:

• Nondiscrimination testing (ADP/ACP)

• Top-heavy testing

• Eligibility and coverage verifications

Early identification of potential compliance issues allows time for corrective action, reducing penalties and administrative headaches.

Maintain Proper Documentation

Providers emphasize maintaining thorough records of:

• Investment committee decisions

• Plan design updates

• Employee communications

Proper documentation protects fiduciaries and demonstrates adherence to ERISA requirements.

Optimize Communication With Employees

Remind Employees About Contribution Limits

Employers often receive support from providers in communicating:

• Maximum 401(k) deferral amounts

• Catch-up contributions for those over 50

• Deadlines for making adjustments before year-end

Clear communication ensures employees maximize their benefits and avoid missed opportunities.

Provide Education on Investments

Providers also help educate employees about:

• Fund options and performance

• Risk diversification

• Resources like retirement calculators or one-on-one counseling

Education increases engagement and helps employees make informed decisions about their retirement.

Review Fees and Expenses

Examine Administrative and Investment Costs

High fees can reduce retirement savings over time. Top 401(k) providers help employers:

• Compare recordkeeping and administrative fees to industry benchmarks

• Review investment management costs

• Explore opportunities for cost savings

This review ensures the plan remains cost-effective and aligns with fiduciary responsibilities.

Make Adjustments Before Year-End

If fees are high or services can be improved, providers advise on changes that can be implemented immediately, maximizing benefits for both employees and the company.

Plan Ahead for the Next Year

Consider Plan Design Changes

Providers encourage employers to assess:

• Matching formulas

• Profit-sharing contributions

• Eligibility requirements

Making design changes at year-end ensures a smooth implementation for the next plan year.

Stay Informed About Regulatory Updates

Top providers keep employers updated on:

• IRS contribution limits

• DOL guidance

• Plan design best practices

This proactive approach reduces risk and positions the plan for success in the coming year.

Partner With a Trusted 401(k) Provider

Working with a knowledgeable provider ensures year-end processes are handled efficiently and accurately. Providers help employers:

• Conduct comprehensive plan reviews

• Optimize plan design and investment options

• Maintain compliance and fiduciary oversight

• Communicate effectively with employees

By partnering with experts, employers can enter the new year confident that their 401(k) plan is on track.

Take Action Today

Year-end is a critical time for 401(k) plan success. By reviewing contributions, investments, compliance, fees, and communication strategies, employers can protect themselves, empower employees, and maximize the value of their retirement plan.

Schedule a consultation with a trusted 401(k) provider today to ensure your plan is fully prepared for 2026 and beyond.

As we move into 2025, employee retention remains one of the biggest challenges for businesses of all sizes. While salary and workplace culture matter, many employers overlook a powerful tool that directly influences job satisfaction and loyalty: a high-quality 401(k) plan.

A well-managed, competitive retirement plan doesn’t just attract talent — it helps keep employees long-term. In today’s tight labor market, improving your company’s 401(k) plan can be one of the smartest investments you make for retention, morale, and overall company stability.

Why Retirement Benefits Matter More Than Ever

Employees Expect Competitive Benefits

Today’s workforce — from Gen Z to late-career employees — views retirement benefits as a key part of their total compensation. A strong 401(k) plan signals that your company is invested in their long-term financial future.

Retention Is Cheaper Than Recruitment

Replacing an employee can cost 50%–200% of their annual salary. Strengthening your 401(k) plan is a much more cost-effective way to retain your team and reduce turnover.

Financial Stress Impacts Productivity

Employees dealing with financial uncertainty are often more stressed, less focused, and more likely to job-hop. Improved 401(k) offerings can reduce this stress and increase loyalty.

How a Better 401(k) Plan Helps You Retain Employees in 2025

1. Increased Employer Contributions Show True Investment

Matching contributions, profit-sharing, and structured vesting schedules are powerful retention tools. When employees see that you’re investing in their future, they’re more likely to invest in yours.

2. Lower Fees Keep More Money in Employees’ Pockets

High plan fees erode long-term savings. Benchmarking your plan against industry standards can reveal opportunities to reduce costs — a major value-add for employees.

3. Better Investment Options Improve Satisfaction

A modern 401(k) plan should include diversified, low-cost investment options, including target-date funds and managed portfolios. Employees feel more confident when they have strong choices and professional guidance.

4. Adding Financial Wellness Programs Builds Loyalty

Workshops, one-on-one guidance, and digital financial tools help employees navigate savings goals, budgeting, and retirement planning. These programs demonstrate that your company cares beyond the workplace.

5. Transparent Communication Builds Trust

Employees want clarity on fees, fund performance, employer match details, and retirement readiness. Regular education and communication strengthen trust and satisfaction.What Employers Should Review Before 2025

Plan Costs

Are your administrative and investment fees reasonable? Are there lower-cost options?

Plan Design

Does your plan structure support retention — or drive employees away? Consider auto-enrollment, automatic increases, or updated matching formulas.

Investment Lineup

Are your fund options diversified, low-cost, and easy to understand?

Provider Performance

Are you getting proactive service, timely reporting, and compliance support?

Stronger Retirement Plans Lead to Stronger Companies

Improving your 401(k) plan isn’t just a financial decision — it’s a strategic move to improve retention, strengthen culture, and build long-term stability within your workforce.

When employees feel supported in their financial future, they’re more engaged, motivated, and committed to staying with your company.

Want to Strengthen Your 401(k) Plan for 2025?

If you're looking to enhance your retirement plan, lower fees, improve service, or boost employee retention, the right guidance can make all the difference.

A comprehensive, no-obligation 401(k) review can show you exactly where your plan stands — and where it can improve. Schedule an Appointment Today! 

As the year comes to a close, now is the perfect time to review your 401(k) investment allocation. A little attention now can help maximize your retirement savings, minimize risks, and ensure your investments are aligned with your financial goals. At Lehigh Valley Top 401(k) Providers, we help clients make informed decisions that optimize their portfolios before the year ends.

Understand Your Current Investment Allocation

What Investment Allocation Means

Your investment allocation refers to how your 401(k) contributions are divided among different types of assets, such as stocks, bonds, and cash equivalents. The right allocation balances growth potential with risk tolerance.

Why It Matters

Market shifts can affect your portfolio over time. Without a review, your allocation might no longer match your goals, potentially exposing you to higher risk or lower returns.

Check for Portfolio Drift

What is Portfolio Drift?

Portfolio drift occurs when certain investments grow faster than others, altering your original allocation. For example, if stocks perform exceptionally well, they may make up a larger portion of your portfolio than intended.

How to Correct It

• Rebalance your portfolio to bring it back to your desired allocation.

• Adjust contributions going forward to maintain the right balance.

• Consider consulting a 401(k) advisor for a personalized plan.

Maximize Your Tax Advantages

Contribution Limits for 2025

For 2025, the IRS allows a maximum employee contribution of $23,000 (or $30,500 if you’re 50 or older). Reviewing your allocation now ensures you’re making the most of these limits.

Tax Benefits of Rebalancing

Rebalancing strategically can help you defer taxes, manage capital gains, and potentially reduce your taxable income, depending on your plan type.

Align Investments With Your Risk Tolerance

Why Risk Tolerance Changes

Your financial situation, goals, and even market conditions can change over time. What felt comfortable last year may be too aggressive or too conservative today.

How to Adjust

• Reassess your risk tolerance annually.

• Consider age-appropriate strategies, such as shifting to more conservative investments as retirement approaches.

• Diversify to protect your portfolio against market volatility.

How Lehigh Valley Top 401(k) Providers Can Help

Reviewing your 401(k) before year-end doesn’t have to be overwhelming. At Lehigh Valley Top 401(k) Providers, we:

• Analyze your current investment allocation

• Recommend adjustments to optimize returns and manage risk

• Help maximize your year-end contributions and tax benefits

Schedule a consultation today to ensure your 401(k) is on track for a strong finish to the year.

Selecting the right 401(k) provider can be a game-changer for your business and your employees. The right provider ensures compliance, low fees, quality investment options, and a seamless employee experience. With so many options on the market, choosing wisely can save time, reduce costs, and improve employee satisfaction.

This guide explains the key factors to consider when evaluating 401(k) providers for your small business.

Why Choosing the Right 401(k) Provider Matters

A 401(k) plan is more than a retirement account—it’s a tool to attract and retain top talent. The wrong provider can result in:

• High fees that eat into employee retirement savings

• Poor investment choices

• Administrative headaches and compliance risks

On the other hand, the right provider helps your business:

• Offer competitive benefits to employees

• Maximize tax advantages for both the business and participants

• Stay compliant with IRS regulations

Key Factors to Consider When Choosing a 401(k) Provider

1. Fees and Transparency

• Look at administrative, recordkeeping, and investment fees.

• Ensure the provider clearly explains all costs.

2. Investment Options

• A good provider should offer diverse funds: stocks, bonds, target-date funds, and low-cost index options.

• Consider the performance history and long-term returns.

3. Employee Support and Education

• Your provider should offer educational resources, one-on-one guidance, and easy-to-use platforms.

• Employee engagement improves when participants understand their options.

4. Compliance and Administration

• Ensure the provider handles ADP/ACP testing, Form 5500 filing, and other compliance requirements.

• Providers that handle administrative tasks reduce stress for business owners.

5. Customization and Flexibility

• Look for a provider that allows you to tailor contribution options, matching formulas, and vesting schedules.

• Flexibility is important as your business grows or employee needs change.

Questions to Ask Potential Providers

When evaluating providers, consider asking:

• How are fees structured? Are there hidden costs?

• What investment options do you offer, and what are the historical returns?

• How do you handle compliance testing and reporting?

• What support and resources are available for employees?

• Can the plan grow with my business?

Working With a Trusted 401(k) Advisor

Even with the best provider, navigating 401(k) options can be overwhelming. Top 401(k) Advisors help small business owners:

• Compare providers and select the right fit

• Streamline administration and compliance

• Ensure employees have the best experience and resources

Choosing the right provider now can protect your employees’ retirement and your business’s future. Make An Appointment Today! 

As the year comes to a close, business owners face critical deadlines for their 401(k) plans. Proper year-end planning ensures compliance, maximizes contributions, and keeps your employees’ retirement goals on track. From contribution limits to plan design adjustments, these are the items you cannot afford to overlook before December 31st.

1. Review 401(k) Contribution Limits

Each year, the IRS updates contribution limits for 401(k) plans. For 2025:

• Employee deferral limit: $23,000 (under 50), $30,500 (50+)

• Total contribution limit (employer + employee): $66,000 (under 50), $73,500 (50+)

Ensure that all employee deferrals and employer contributions are aligned with these limits. Making adjustments now can help participants maximize their retirement savings.

2. Verify Employer Contributions

If your plan includes matching or profit-sharing contributions, now is the time to confirm that all employer contributions are calculated and scheduled.

• Check contribution formulas and eligibility requirements

• Ensure that highly compensated employees (HCEs) are contributing enough to pass nondiscrimination testing

3. Perform Nondiscrimination Testing

401(k) plans must pass ADP, ACP, and top-heavy testing annually. These tests ensure that highly compensated employees don’t benefit disproportionately.

• Conduct preliminary testing now to identify shortfalls early

• Make corrective contributions if necessary to avoid penalties

4. Send Required Notices to Participants

Year-end is also a key time to confirm that your plan meets notice requirements:

• Safe Harbor notices

• Automatic enrollment notices

• Qualified Default Investment Alternative (QDIA) notices

Failing to send these notices on time can trigger compliance issues and potential penalties.

5. Review Plan Design Changes

Year-end is a great time to evaluate your 401(k) plan’s structure. Consider:

• Increasing matching contributions to incentivize employees

• Adding or modifying automatic enrollment or auto-escalation features

• Reviewing investment options and fees to ensure the plan is competitive and cost-efficient

Even small changes now can have a significant impact on participation and retirement outcomes.

6. Confirm Administrative Deadlines

Ensure that all administrative tasks are on track, including:

• Contribution deposits for the year

• Form 5500 preparation (if applicable)

• Participant statements and disclosures

Meeting these deadlines keeps your plan in good standing and avoids IRS or DOL issues.

7. Meet with Your 401(k) Advisor

Finally, scheduling a year-end review with your 401(k) advisor is essential. They can:

• Evaluate your plan’s compliance and performance

• Identify opportunities to increase contributions or improve plan design

• Ensure your company is prepared for 2025 changes

Working with a trusted advisor helps business owners avoid costly mistakes and optimize retirement benefits for their employees.

Conclusion

The end of the year is a critical time for 401(k) plan compliance, contributions, and design adjustments. By following this year-end checklist, business owners can ensure they are on track, protect their company from compliance issues, and help employees maximize their retirement savings.

Don’t wait until the last minute—start your year-end 401(k) review today to make the most of 2025 and set your plan up for success in 2026.

Don’t Miss the Deadline: Why Your Required Minimum Distribution (RMD) Must Be Taken Before the End of the Year

What Is a Required Minimum Distribution (RMD)?

A Required Minimum Distribution (RMD) is the minimum amount most retirees must withdraw each year from their retirement accounts once they reach a certain age. These withdrawals are mandated by the IRS and apply to accounts such as:

• Traditional IRAs

• SEP IRAs

• SIMPLE IRAs

• 401(k), 403(b), and other employer-sponsored plans

RMDs exist to ensure that individuals eventually pay taxes on the funds accumulated in tax-deferred retirement accounts.

When Do You Have to Take Your RMD?

The End-of-Year Deadline

For most retirees, the RMD deadline is December 31 each year. Missing this date can result in a significant IRS penalty—25% of the amount that wasn’t withdrawn (which may be reduced to 10% if corrected quickly).

If you turned 73 this year (as of 2025), you have until April 1, 2026, to take your first RMD. Every year after that, your RMD must be taken by December 31.

How to Calculate Your RMD

Your RMD amount is based on:

1. Your account balance as of December 31 of the previous year.

2. Your IRS life expectancy factor, found in the official IRS tables.

For example, if your IRA balance was $500,000 on December 31, 2024, and your life expectancy factor is 25.6, your 2025 RMD would be roughly $19,531 ($500,000 ÷ 25.6).

Keep in mind:

• IRAs: You can take your total RMD from one or more IRA accounts.

• 401(k)s and other employer plans: You must take a separate RMD from each account.

Why It’s Important to Take Your RMD Before Year-End

1. Avoid Costly IRS Penalties

If you fail to withdraw your RMD by the December 31 deadline, you could owe a 25% penalty on the amount not withdrawn. Even though the penalty can be reduced if corrected promptly, it’s best to stay ahead of the deadline.

2. Manage Your Taxes Effectively

RMDs count as taxable income, which can impact your tax bracket, Medicare premiums, and eligibility for certain deductions. Taking your RMD strategically can help minimize your tax burden.

3. Keep Your Financial Plan on Track

Taking your RMD provides a great opportunity to review your full financial picture. You might consider:

• Using part of your RMD for qualified charitable distributions (QCDs).

• Reinvesting funds into a taxable investment account.

• Adjusting your withdrawal strategy for retirement income stability.

Strategies to Make RMDs Easier

Automate Your Withdrawals

Setting up automatic RMD withdrawals through your financial advisor or custodian ensures you never miss the year-end deadline.

Use Qualified Charitable Distributions (QCDs)

If you’re age 70½ or older, you can donate up to $100,000 per year directly from your IRA to a qualified charity. This counts toward your RMD and reduces your taxable income—a smart move for both your finances and philanthropy.

Reinvest What You Don’t Need

If your RMD exceeds your spending needs, consider reinvesting the funds in a taxable brokerage account or using them to rebalance your investment portfolio.

Key Takeaway

Before the year ends, make sure your Required Minimum Distribution is complete. Taking your RMD by December 31 helps you avoid penalties, stay tax-efficient, and keep your long-term financial plan running smoothly.

Schedule Your RMD Review with One of Our Financial Advisors Today!

If you have a 401(k) through your employer, you’re already taking a smart step toward building long-term financial security. But one term that often confuses employees is “vesting.”

So what exactly does vesting mean in a 401(k), and how does it impact your retirement savings? Let’s break it down in simple terms.

What Is Vesting in a 401(k)?

Vesting refers to the percentage of your employer’s contributions to your 401(k) that you actually own.

Your own contributions are always 100% yours—no matter how long you stay with your company. But the money your employer adds (through a match or profit-sharing) may be subject to a vesting schedule, meaning you need to stay employed for a certain amount of time before that money fully belongs to you.

Why Does Vesting Exist?

Vesting is designed to reward employee loyalty and retention. Employers use vesting schedules to encourage workers to stay with the company longer.

It’s a way of saying:

“If you stick around, you’ll earn full rights to the company’s contributions to your retirement.”

If you leave your job before you’re fully vested, you may forfeit part or all of the employer contributions—though you’ll always keep your own contributions and any investment earnings on them.

Types of 401(k) Vesting Schedules

There are three common types of vesting schedules, each with different rules for when your employer contributions become yours.

1. Immediate Vesting

With immediate vesting, employer contributions belong to you right away.

• If your company offers this, you can take 100% of your employer match with you if you leave tomorrow.

• Immediate vesting is common in organizations that want to attract and retain top talent quickly.

2. Cliff Vesting

Cliff vesting means you become fully vested after a specific period of time—typically one to three years.

• Before you hit the “cliff,” you don’t own any employer contributions.

• Once you reach that mark, you’re 100% vested all at once.

Example: If your company has a 3-year cliff vesting schedule, you’ll need to work there at least three years to keep all the employer-matched funds.

3. Graded (or “Graduated”) Vesting

Graded vesting lets you earn ownership gradually over time.

• You might gain 20% vesting per year until you’re fully vested at year five, for example.

• This approach rewards employees incrementally for staying longer.

Example:

What Happens to Unvested Funds If You Leave Early?

If you leave your job before becoming fully vested, you’ll forfeit the unvested portion of your employer’s contributions.

However, you’ll still keep:

• Your own 401(k) contributions

• Any investment gains earned on your contributions

• Any vested employer contributions

Those vested funds can be rolled over into your next employer’s 401(k) plan or into an IRA.

How to Check Your Vesting Status

You can find your current vesting information by:

• Reviewing your 401(k) statement or online portal

• Asking your HR or benefits department for details

• Checking your Summary Plan Description (SPD) — it outlines your company’s vesting schedule in detail

Knowing your vesting status can help you plan career moves strategically—especially if you’re close to becoming fully vested.

Why Vesting Matters for Your Financial Future

Understanding vesting can make a big difference in your long-term savings. For example:

• Leaving a job just a few months before becoming fully vested could mean losing thousands of dollars in employer contributions.

• Staying a bit longer could ensure that money becomes yours for life.

It’s not just about working longer—it’s about maximizing your earned benefits and protecting your retirement nest egg.

The Bottom Line: Know When Your Money Becomes Yours

Vesting is your key to understanding when employer contributions to your 401(k) truly belong to you.
By checking your company’s vesting schedule, you can make smarter career and retirement planning decisions—ensuring that you keep as much of your hard-earned money as possible.

Need Guidance with Your 401(k) or Retirement Plan?

At Top 401(k) Advisors, we help you make the most of your retirement savings—from understanding your 401(k) benefits to building a personalized investment strategy that supports your goals.

Let’s secure your financial future together.
Contact us today to schedule your complimentary retirement planning consultation.

Changing jobs is an exciting step in your career, but it often raises questions about your 401(k) retirement savings. Many employees wonder: “Do I have to cash out my 401(k)? Can I take it with me? What are my options?”

This guide explains what happens to your 401(k) when you leave a job, your choices for managing your retirement funds, and tips to make the transition smooth.

What Happens to Your 401(k) When You Leave Your Job?

When you leave an employer, your 401(k) account doesn’t disappear — the money you’ve saved remains yours. However, how you manage it depends on several factors, including your account balance and your new employer’s plan.

Vested vs. Unvested Contributions

• Vested Contributions: These are funds that fully belong to you, including your contributions and any employer match you’ve earned according to your vesting schedule. You can take these with you when you leave.

• Unvested Contributions: If you leave before fully vesting, you may forfeit a portion of your employer match. Your personal contributions are always yours.

Your Options for Managing Your 401(k) After a Job Change

When you change jobs, you typically have four options for your 401(k):

1. Leave the 401(k) with Your Former Employer

• You can keep your funds in your previous employer’s plan if the balance is above a minimum (usually $5,000).

• Benefits: No immediate taxes or penalties.

• Drawbacks: Limited access to investment choices and less control over the account.

2. Roll Over to Your New Employer’s 401(k) Plan

• If your new employer offers a 401(k), you can roll over your old balance into the new plan.

• Benefits: Consolidates accounts, continues tax-deferred growth, and often keeps you invested in a familiar platform.

• Drawbacks: Some plans have limited investment options or higher fees.

3. Roll Over to an IRA

• You can roll your 401(k) into a Traditional or Roth IRA, depending on your tax strategy.

• Benefits: Greater investment flexibility, potential for lower fees, and continued tax-deferred growth.

• Drawbacks: Must follow IRS rollover rules to avoid taxes and penalties.

4. Cash Out Your 401(k)

• You can withdraw the funds in a lump sum, but this is generally not recommended.

• Consequences: You’ll owe income taxes and, if you’re under 59½, a 10% early withdrawal penalty. Cashing out can significantly reduce your retirement savings.

Things to Consider Before Making a Decision

Taxes and Penalties

• Avoiding taxes and penalties is crucial. Direct rollovers into a new 401(k) or IRA are typically tax-free.

• Indirect rollovers (receiving a check first) may trigger taxes if not completed within 60 days.

Investment Options

• Compare investment choices, fees, and performance between your old plan, new plan, and IRAs.

Convenience and Management

• Consolidating your retirement accounts can make it easier to track your savings and stay on top of your retirement goals.

Tips for a Smooth 401(k) Transition

1. Review your old plan documents to understand your options and any deadlines.

2. Check your new employer’s 401(k) plan for eligibility and investment options.

3. Consult a financial advisor if you’re unsure about rollovers, taxes, or investment choices.

4. Avoid cashing out unless it’s an absolute necessity.

The Bottom Line

Changing jobs doesn’t mean losing your 401(k). You have several choices: leave it, roll it over to a new 401(k), roll it over to an IRA, or cash it out — though cashing out is rarely the best option. Making an informed decision can protect your retirement savings and keep you on track toward your long-term goals.

At Top 401k Advisors, we help clients navigate 401(k) rollovers, tax implications, and investment decisions, ensuring your retirement savings work as hard as you do.

Need Help With Your 401(k)? Make an Appointment!

Offering a 401(k) plan is one of the best ways to attract and retain great employees — but as a business owner, it also comes with fiduciary responsibilities under federal law. Understanding these duties is critical to staying compliant, protecting your business, and ensuring your employees’ retirement savings are managed properly.

In this article, we’ll break down what fiduciary responsibility really means, the legal obligations plan sponsors face, and how you can limit liability while maintaining a compliant, high-quality retirement plan.

What Is a 401(k) Fiduciary?

A fiduciary is any individual or entity that manages or exercises authority over a 401(k) plan’s assets, or has influence over decisions made on behalf of participants.

In most small businesses, the plan sponsor — usually the owner or key decision-maker — automatically becomes a fiduciary. If you select the investment options, approve plan changes, or oversee administrative duties, you’re acting in a fiduciary capacity.

The Core Fiduciary Duties of a 401(k) Plan Sponsor

1. Duty of Loyalty

You must act solely in the best interest of plan participants and beneficiaries. That means all decisions — from choosing investment options to approving service providers — must benefit your employees, not your business or personal interests.

2. Duty of Prudence

Plan sponsors must make decisions with the care, skill, and diligence that a knowledgeable expert would use. This includes regularly reviewing investment performance, understanding fees, and documenting all plan decisions.

3. Duty to Diversify Investments

Fiduciaries are required to offer a diversified mix of investment options to minimize the risk of large losses. This helps protect participants’ retirement savings from being overly dependent on one type of investment or market condition.

4. Duty to Follow Plan Documents

Every 401(k) plan operates under a written plan document that outlines how it should be managed. Fiduciaries must strictly follow those rules unless they conflict with federal law.

5. Duty to Monitor Service Providers

If you hire third-party administrators, recordkeepers, or investment managers, you must regularly monitor their performance and fees. Hiring an expert doesn’t remove your fiduciary responsibility — you still have to ensure they’re acting in your plan’s best interest.

Legal Obligations and Potential Liability

The Employee Retirement Income Security Act (ERISA) governs 401(k) fiduciary responsibilities. Under ERISA, fiduciaries can be held personally liable for losses to the plan resulting from a breach of duty.

That means if you make a decision that harms participants — even unintentionally — you could be required to restore any losses and face legal penalties. Common fiduciary violations include:

• Failing to monitor investment fees

• Offering poorly diversified investment options

• Using plan assets for business purposes

• Delaying contributions to employee accounts

• Not properly documenting plan decisions

How Business Owners Can Limit Fiduciary Liability

1. Partner with a 3(38) Investment Manager or 3(21) Advisor

Working with a qualified financial advisor or third-party fiduciary can offload some of your fiduciary responsibilities. A 3(38) advisor assumes discretion over investment decisions, while a 3(21) advisor provides guidance and recommendations but leaves final authority with you.

2. Keep Detailed Documentation

Always document meetings, decisions, and the rationale behind plan changes. Clear records help prove that you acted prudently and in good faith.

3. Conduct Regular Plan Reviews

Review investment performance, fees, and provider services at least once a year. Benchmarking your plan against industry standards helps ensure competitiveness and compliance.

4. Educate Yourself and Your Team

Fiduciary education can reduce risk and improve confidence in managing your 401(k) plan. Many financial advisors and plan providers offer complimentary fiduciary training sessions.

Why Fiduciary Compliance Matters

Beyond legal protection, strong fiduciary practices build employee trust. When workers know their retirement plan is managed responsibly, it improves morale, retention, and overall engagement.

Plus, maintaining compliance reduces the chance of costly audits or lawsuits — helping you focus on running your business instead of managing legal issues.

Final Thoughts

Being a 401(k) plan sponsor is both a privilege and a responsibility. Understanding and upholding your fiduciary duties not only protects you from liability but ensures your employees’ financial futures are in good hands.

If you’re unsure whether your plan meets fiduciary standards, or want to explore ways to reduce your liability, Cornerstone Portfolios can help you assess your current setup and implement strategies to strengthen your plan oversight.

Make an Appointment Today! 

As the year winds down, employers have a critical opportunity to review and optimize their 401(k) plans. Q4 is a key period for ensuring compliance, maximizing employee engagement, and planning for year-end contributions. By taking proactive steps now, companies can set themselves and their employees up for success.

Here’s what employers should focus on in the final quarter of the year.

Review Contributions and Participation Rates

Ensure Employee Deferrals Are On Track

Check that employees are contributing enough to maximize their retirement savings within IRS limits. This includes:

• Confirming payroll deferrals are accurate

• Reminding employees about the maximum 401(k) contribution limits for 2025

• Highlighting catch-up contributions for employees over 50

A proactive approach helps employees take full advantage of tax-deferred savings before the year ends.

Evaluate Participation Across the Workforce

Review which employees are actively contributing and which may need encouragement. Employers can:

• Send targeted reminders about enrollment and contribution increases

• Offer educational sessions or resources

• Ensure fair participation to comply with nondiscrimination requirements

High participation rates benefit both employees and plan compliance.

Conduct a Year-End Compliance Review

Perform Required Testing

Q4 is the ideal time to ensure your plan is meeting regulatory requirements. Important tests include:

• ADP/ACP nondiscrimination tests

• Top-heavy testing

• Eligibility and coverage verification

Early testing allows for corrective actions if issues are identified, avoiding last-minute penalties or adjustments.

Document Fiduciary Decisions

Proper documentation is essential for fiduciary compliance. Ensure records include:

• Investment selections and committee decisions

• Plan design or contribution changes

• Communications sent to employees

This documentation protects the company and demonstrates adherence to ERISA requirements.

Evaluate Investment Options and Fees

Review Fund Performance

Top 401(k) providers recommend evaluating investment performance against benchmarks to ensure the plan meets employees’ retirement goals. Key considerations include:

• Risk-adjusted returns of core funds

• Performance of target-date funds

• Diversification across asset classes

Adjustments may be needed if certain funds consistently underperform.

Examine Administrative and Investment Fees

High fees can erode retirement savings over time. Q4 is an opportunity to:

• Compare administrative and recordkeeping costs to industry benchmarks

• Review investment management expenses

• Discuss potential cost-saving options with your provider

Cost efficiency supports both fiduciary compliance and employee satisfaction.

Communicate With Employees

Provide Year-End Contribution Reminders

Educate employees about:

• Maximum contribution limits

• Catch-up contributions

• Deadlines to make changes before year-end

Clear communication ensures employees don’t miss opportunities to save.

Highlight Plan Benefits and Resources

Encourage employees to:

• Review investment options

• Understand risk levels

• Take advantage of plan resources like calculators or counseling

This helps employees make informed decisions and feel confident in their retirement planning.

Plan for 2026 and Beyond

Consider Plan Design Adjustments

Q4 is the perfect time to evaluate:

• Employer matching formulas

• Profit-sharing strategies

• Eligibility rules

Making adjustments now ensures smooth implementation for the next plan year.

Stay Informed About Regulatory Updates

Stay up-to-date on IRS limits, Department of Labor guidance, and best practices. Planning ahead reduces compliance risks and ensures your plan is optimized for employees.

Partner With a Trusted 401(k) Provider

Top 401(k) providers emphasize the value of professional guidance. A knowledgeable partner can help employers:

• Conduct accurate year-end reviews

• Optimize investment menus

• Maintain compliance and fiduciary oversight

• Improve employee engagement and satisfaction

Proactive planning in Q4 positions both employers and employees for long-term retirement success.

Take Action Today

The final quarter of the year is the ideal time to review contributions, compliance, fees, and communication strategies for your 401(k) plan. By taking these steps now, employers can ensure their plan is on track, employees are informed, and the organization is fully prepared for 2026.

Schedule a consultation with a trusted 401(k) provider today to make the most of your plan before year-end.