For many HR teams and plan sponsors, retirement plan compliance can feel reactive. A nondiscrimination test fails, refunds go out, corrections are made, and the plan moves on.
That’s not how it plays out everywhere. Some organizations deal with fewer surprises, make clearer decisions, and spend less time putting out fires. Their retirement plan supports retention and leadership confidence instead of becoming another annual stress point.
That edge, that competitive advantage, usually isn’t about outsmarting the rules or adding complexity. It’s not about working harder or getting lucky. It comes down to how the plan is designed.
When Compliance Issues Signal a Design Problem
Repeated nondiscrimination test failures are rarely just an administrative issue. More often, they reflect a gap between how a plan is designed and how employees actually use it.
Low participation among non-highly compensated employees, eligibility rules that no longer fit the workforce, or plan features that haven’t kept pace can all contribute to testing challenges. When those issues are only addressed at testing time, employers are left reacting instead of planning.
Plan sponsors who treat compliance as a design input rather than a year end hurdle are better positioned to anticipate outcomes and make thoughtful adjustments before problems surface.
Fiduciary-First Design Changes the Outcome
A key differentiator in how employers experience compliance comes down to a fiduciary approach.
Fiduciary-first plan design means recommendations are evaluated based on participant outcomes and employer risk, not convenience or product incentives. Whether that involves reviewing Safe Harbor options, evaluating a QACA structure, or modeling eligibility changes, the goal is the same: align plan mechanics with long-term success.
This approach allows plan sponsors to move beyond one-time fixes and toward decisions that stand up over time.
Proactive Compliance Reduces Cost and Complexity
Compliance challenges often feel expensive because they arrive late and require fast action. Proactive planning changes that dynamic.
When plan sponsors understand how tools such as top-paid group elections, permissive disaggregation, or upcoming SECURE 2.0 provisions affect their workforce, they gain flexibility. Adjustments can be modeled, costs can be anticipated, and decisions can be made with clarity rather than urgency.
The result is fewer corrective contributions, fewer surprises, and more predictable outcomes year over year.
Participation Is the Multiplier
Many plans rely on employer contributions to force testing success. And while that can be necessary at times, it often increases cost without fixing what’s really driving the problem.
Plans that are designed to encourage participation tend to perform better overall. Automatic features, clear communication, and access to guidance help employees understand the value of saving and feel more confident engaging with the plan. As participation improves, testing results usually follow in a more natural and sustainable way.
For plan sponsors, that translates into fewer corrective actions and a plan that works with employee behavior instead of constantly pushing against it.
What Competitive Advantage Looks Like in Practice
Plan sponsors who approach compliance through a fiduciary lens tend to experience very real, very practical advantages.
They see:
- Fewer year end compliance surprises
- Greater confidence when making plan decisions
- Less friction between HR, finance, and leadership
- A retirement plan that supports retention and organizational credibility
Instead of reacting to testing failures as they arise, these employers make decisions grounded in fiduciary responsibility and long term outcomes.
How to Evaluate Your Fiduciary Support
Not every advisor relationship is structured to support this level of fiduciary responsibility. And that is not always obvious from the outside.
A good place to start is by asking how plan design decisions are made today. Are recommendations driven by participant outcomes and employer risk, or by convenience and one-time fixes? Are compliance challenges anticipated and discussed ahead of testing season, or addressed only after results are in?
Carnegie Investment Counsel works with plan sponsors in a co-fiduciary capacity, helping them move from reactive compliance toward plan decisions that are grounded in fiduciary responsibility and built to hold up over time.
If your retirement plan feels like it is constantly being adjusted rather than thoughtfully shaped, a conversation can help clarify whether your current approach is managing risk or quietly creating it.
Retirement plan questions? Talk with an advisor.
For informational and educational purposes only; this is not intended to be legal advice Opinions are subject to change.
Carnegie Investment Counsel (“Carnegie”) is a registered investment adviser with the Securities and Exchange Commission. Registration as an investment adviser does not imply a certain level of skill or training. For a more detailed discussion about Carnegie’s investment advisory services and fees, please view our Form ADV and Form CRS by visiting: https://adviserinfo.sec.gov/firm/summary/150488.
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