Looking Ahead to 2027: A Budgeting Guide for Retirement Plan Sponsors
As organizations prepare budgets for 2027, retirement plan sponsors have an opportunity to review plan expenses, evaluate service arrangements, and identify priorities for the year ahead.
Retirement plan budgeting does not need to be complicated. The objective is to understand the plan’s total cost, assess whether services continue to meet the plan’s needs, and evaluate potential changes before budget decisions are finalized.
Understand the Full Cost of the Plan
Retirement plans carry several types of expenses. The employer pays some costs directly, while plan assets cover others or investment expenses absorb them. Plan fiduciaries should understand plan fees and decide whether those costs are appropriate for the services the plan receives.
A comprehensive review may include recordkeeping fees, third-party administration and compliance costs, advisory fees, investment expenses, audit and legal fees, employer matching or profit-sharing contributions, and participant education and communication expenses.
Reviewing the full cost structure can help sponsors understand where plan dollars go and supports more accurate budget projections.
Evaluate Services Alongside Fees
Costs tell only part of the story. Plan sponsors should also consider whether service providers continue to provide the support outlined in their agreements.
Sponsors may want to review whether reports arrive on time, administrative processes operate efficiently, and employees can reach education and support resources. They may also consider whether current fees fit the plan’s size, complexity, and service requirements.
If the plan has grown or changed significantly, existing service arrangements may warrant closer evaluation.
Project Employer Contribution Costs
For many organizations, employer contributions represent one of the largest retirement plan expenses. When preparing a 2027 budget, sponsors may benefit from reviewing recent payroll data, participation levels, and contribution trends rather than relying solely on the prior year’s budget alone.
Changes in headcount, compensation levels, participation rates, or employee deferral elections may affect future contribution costs. Organizations considering plan design changes such as automatic enrollment, automatic escalation, or a new matching formula may want to estimate the financial impact first.
Plan Ahead for Potential Changes
Some retirement plan decisions require coordination among finance, human resources, payroll, recordkeepers, administrators, and advisors. Reviewing potential changes in the fall can help give these groups more time to evaluate options before year-end deadlines and employee communications begin.
Sponsors may use this review period to evaluate employer contribution formulas, automatic enrollment features, employee education initiatives, service provider relationships, and upcoming regulatory developments.
The Bottom Line
A retirement plan budget does more than track dollars. It provides an opportunity to review costs, evaluate services, and assess future priorities.
Sponsors who review plan expenses, project contribution costs, and identify potential changes before year-end can approach 2027 with a clearer understanding of the resources required to support plan operations and participant needs.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation.
Patricia L. Hutchinson
Director of Retirement Plan Services
AIF®, MBA