Like pro athletes, the best 401(k) plans all share some key features. They are top performers for a reason.
According to a recent “Best in Class” survey by plansponsor.com, the most highly rated plans make an effort to provide the best funds at the lowest cost.

This is a summary of what the best plans do:

  • High Participation Rate: Employers who care about their employees get nearly every one of them in a plan: 95% participation vs. less than 80% for all other plans.
  • Smart Investment Choices: Nearly all of the plans offer low-cost index funds, managed accounts and Roth options.
  • Easy Enrollment and Auto-Contributions: All of the best plans automatically enrolled employees in their plan, bumped up their contributions when they got raises and offered eligibility within three months of starting a job.
  • Financial Education Offered; From 88% to 94% of the plans surveyed, investing basics and saving/budgeting skills were presented. More than half of the plans gave advice on college savings and credit/debt management.

How does your 401(k) plan stack up? If it’s not performing well or doesn’t emulate some of the top plans, then you can ask your employer to upgrade it. Here’s what I suggest:

Find a low-cost provider. Nearly all of the top fund groups can provide an array of services.
Stock your plan with the cheapest index funds. Here’s a simple rule of thumb: Choose funds with single-digit expense ratios.
Get help. Ask your employer for guidance on choosing the best funds for your age and career path.
You can achieve some results by forming an informal committee to approach your employer. Find out who the plan administrator is and offer suggestions. It’s in their best interests to improve your plan because federal law requires that they act in your best interest.