Offering a 401(k) plan to employees is one of the most compelling benefits to attract and retain your employees. However, if your staff is not participating in the company-sponsored 401(k) plan, the perceived value is zilch! And for small businesses, participation is less than 70%
Not all 401(k) plans are created equal, and there are a few features you can consider to encourage your employees to take advantage of your company’s 401(k). Here are 4 ways you can increase employee participation in your 401(k).
People like getting free money, and adding an employer match to your 401(k) feels like that to most employees. Often, they will only contribute up to the amount that is matched by their employer. So, adding an employer match contribution can encourage participation.
For those employees who are unsure about investing in their retirement, setting up an auto-enrollment once they are eligible is one way to improve participation. Of course, they can opt out whenever they want to, or they can even change their contribution amount.
No Waiting Periods:
Ok. Maybe that’s not doable, but you can reduce the waiting period for new employees to participate in the 401(k) plan. The sooner they can get involved with the company plan, the sooner they feel they are a part of the team. Plus, they get an earlier start on their investing. Long waiting periods are detrimental to an employee’s initial excitement of being involved with your company. Consider eliminating waiting periods.
If you don’t experience high-employee turn-over at your company, this may be one of the best ways to improve employees participating in your 401(k). Just like eliminating waiting periods, immediate vesting motivates employees to begin participating right away.
Since not every company 401(k) plan is exactly the same, contact SaveDay to find a custom plan that is right for you.