The 5 Most Common 401(k) Red Flags in DOL Filings

Every year, every 401(k) plan in America files a Form 5500 with the Department of Labor. It’s one of the most overlooked disclosures in finance: a public, machine-readable record of how well (or poorly) your retirement plan is run. Employees rarely read it. Neither, frankly, do most business owners.

We’ve reviewed thousands of Texas plan filings. Five red flags show up again and again. Here’s what they are, why they matter, and where to find them on a 5500.

1. Administrative fees above ~0.75% of plan assets

What it is. Administrative and service-provider fees — recordkeeping, custody, compliance, and advisor compensation — expressed as a percentage of total plan assets.

Why it matters. The Investment Company Institute (ICI) has published 401(k) plan expense data for years; the average all-in fee for 401(k) plans is now well under 1%, and many mid-sized plans benchmark closer to 0.30–0.60%. Fees above ~0.75% tend to indicate a bundled provider relationship that was priced a decade ago and never revisited. Over a career, a 1% difference in annual fees can reduce an employee’s final balance by roughly 28% — an often-cited figure from the DOL’s “A Look at 401(k) Plan Fees” publication.

Where to find it. On a Form 5500 with Schedule H, the administrative expense lines sit near the bottom of the Income & Expenses section: contract administrator fees, other recordkeeping fees, trustee/custodial fees, and investment management fees. Divide the sum by total plan assets. For plans filing the short Form 5500-SF, look at line 10e (“Administrative service providers”).

2. Late or missing Form 5500 filings

What it is. Form 5500 is generally due seven months after plan year-end (for a calendar-year plan, that’s July 31). Plans can request an automatic extension to October 15. Filings that arrive after that — or that were submitted under the DOL’s Delinquent Filer Voluntary Compliance (DFVC) program — are a process-health signal.

Why it matters. Late filings don’t automatically mean anything is wrong with the investments. But they often indicate strained administration, a recent vendor transition that didn’t go smoothly, or a TPA who isn’t communicating with the plan sponsor. ERISA penalties for late filings can reach $2,670 per day as of recent inflation adjustments. Repeatedly late filings deserve attention.

Where to find it. The DATE_RECEIVED field on the public DOL dataset is your timestamp. Compare it to the plan year-end. Anything beyond the ~9.5-month extended deadline is worth a conversation.

3. Missing audit on a 100+ participant plan

What it is. Under ERISA §103(a)(3), plans with 100 or more eligible participants on the first day of the plan year are generally required to attach the opinion of an Independent Qualified Public Accountant (IQPA). This audit is a genuine safeguard — the auditor reviews plan controls, the reconciliation of contributions, and whether assets actually exist where the recordkeeper says they do.

Why it matters. A missing or deficient audit for a plan above the participant threshold is a fiduciary issue. The DOL has public enforcement data showing audit deficiencies are one of the most common issues flagged in agency reviews. If you’re a plan fiduciary, an incomplete audit package is a personal liability concern, not just a paperwork one.

Where to find it. On a large-plan 5500, look for Schedule H and the accountant’s opinion attachment. The ACCT_OPIN_NOT_ON_FILE_IND field on the public dataset tells you whether the opinion is on file. If that indicator is set and your active participant count is above 100, ask your TPA what happened.

4. Low participation rates

What it is. The ratio of employees with an account balance to total eligible employees. A healthy plan typically sees 80%+ participation among eligible workers — sometimes higher in plans with automatic enrollment.

Why it matters. Low participation is rarely about employees not caring. It’s usually about design: no auto-enrollment, a weak match formula, confusing enrollment paperwork, or default contribution rates set so low that employees don’t notice. Vanguard’s annual How America Saves report consistently finds that plans with auto-enrollment have participation rates roughly 30 percentage points higher than voluntary-enrollment plans. A plan with 50% participation is leaving the employer’s largest non-cash benefit on the table.

Where to find it. Compare TOT_ACTIVE_PARTCP_CNT (active participants) against PARTCP_ACCOUNT_BAL_CNT (participants with a balance). If the latter is materially smaller, you likely have an engagement gap.

5. Employer stock concentration

What it is. The percentage of total plan assets held in the sponsoring employer’s own stock.

Why it matters. Employer-stock concentration is a decades-old lesson — think Enron, Lehman, WorldCom — that still quietly haunts some plans. ERISA’s prudence and diversification duties don’t prescribe a hard cap, but courts and regulators have looked very skeptically at plans where a significant portion of participant assets sit in a single stock (often the same stock that drives participants’ paychecks). Most modern plans cap employer securities at 10–15% of assets, and many simply don’t offer the option.

Where to find it. On Schedule H, the EMPLR_SEC_EOY_AMT field reports the end-of-year value of employer securities. Divide by total plan assets. Anything above ~20% deserves a serious conversation with a licensed advisor.

Putting it together

Red flags on a 5500 aren’t proof of wrongdoing — they’re prompts. A plan with 1.2% fees and a missing audit isn’t necessarily negligent; it’s probably just overdue for a second opinion. The Form 5500 exists precisely so sponsors, employees, and fiduciaries can check.

If you’d like a free, personalized red-flag report for your own plan, pulled straight from the most recent DOL filing, run your company through our Plan Lookup tool. No sales pitch, no cost — just 15 minutes with a licensed Texas-based advisor if we find something worth discussing.