Common mistakes we see in veterinary practice 401(k) plans

For many veterinary practice owners, setting up a 401(k) plan feels like a one-and-done milestone—an important step in offering employee benefits and building a financial foundation for the business. But as with much in veterinary medicine, the initial diagnosis isn’t the end of the story. Plans evolve, needs shift, and overlooked details can quietly create problems over time.

In our work with veterinary professionals across California, we regularly review 401(k) plans. What’s striking is not how unique the challenges are, but how common. We’ve noticed a pattern of avoidable missteps that show up again and again, even in well-run practices. Here are five that stand out.

1. Set it and forget it: Plans that haven’t kept up

Many 401(k) plans were set up years ago under entirely different practice conditions. A team of five might now be twenty. The owner’s goals may have shifted from saving aggressively to succession planning. Yet the plan remains untouched.

Plans should be dynamic. They should evolve with your business. Sticking with an outdated design might mean you’re missing out on tools, like profit-sharing options or Safe Harbor contributions, that could work better for your practice today.

2. Unseen costs: The fee structures nobody talks about

One of the most surprising things we encounter? Practices that don’t know what their plan costs or what their employees are paying. Fees can be complex, embedded in multiple layers of providers. They’re not always obvious, and over time they compound.

In an industry where margins matter, paying more than you need to, without realizing it, can quietly erode your team’s long-term savings and create fairness concerns. Asking, “Are our fees still reasonable?” is a powerful and often overdue question.

3. Participation gaps: When great plans go unused

Here’s a curious paradox: even when practices offer decent plans, participation can lag. Often, it’s not the plan—it’s the communication. Team members might not understand the value, might feel intimidated by investment decisions, or might assume it’s “not for someone like me.”

Some practices are beginning to think more like educators than employers by using automatic enrollment, simple language, and even short workshops to make the plan feel accessible. Participation isn’t just a compliance issue; it’s a reflection of how financially supported your team feels.

4. Fuzzy roles: Who’s actually managing the plan?

Veterinary medicine is full of trust-based delegation. You lean on vendors, payroll providers, or software platforms to “run” your plan. But many practice owners don’t realize they could be legally considered fiduciaries and ultimately responsible for the plan’s operations, investment choices, and oversight.

Let’s be blunt: if your vendor screws up, the liability still lands on your desk. It’s not about doing everything yourself, but it is about owning your role. You need a process, formal or not, for regularly reviewing your plan. If there’s a problem, “I thought my vendor handled that” doesn’t cut it with the Department of Labor.

5. The big picture is missing

Finally, many plans operate in a vacuum. They work fine on paper but don’t connect to larger business goals. Are you using your 401(k) to retain staff? To build value ahead of a sale? To improve current-year tax deductions? Or is it just there?

When the plan becomes part of the bigger picture—tied to culture, strategy, or owner exit plans—it can become a surprisingly powerful lever. And sometimes, just asking the question is the first step.

A living system

Veterinary professionals are no strangers to ongoing care plans. Your 401(k) is no different. Like a wellness exam for your finances, a periodic review can reveal hidden risks, uncover better options, and help align your plan with the future you're building for yourself and your team.