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.