401(k) Plan Design for Today’s Businesses
In today’s dynamic business landscape, where retaining top talent and promoting employee satisfaction are critical, a well-designed 401(k) plan can serve as a strategic advantage. It’s more than just meeting regulatory requirements; it’s about guiding your employees towards financial security, which in turn fosters loyalty and strengthens workplace culture. Employers aiming to create a plan that benefits both the company and its staff will discover that personalization and a strong partnership are key components to success.
The Hidden Costs of Delayed Retirement
Delayed retirement and inadequate savings are not only stressful for employees but can also lead to significant financial burdens for companies, especially those managing retirement plans worth $2 million to $150 million. With nearly 70% of pre-retirees feeling that the traditional retirement age is irrelevant and 41% expecting to work during retirement due to financial necessity, it’s crucial to consider the financial impact of delayed retirement, insufficient savings, and the resulting workplace distractions.1
When employees delay retirement, it doesn’t just affect them personally—it creates financial and operational challenges for employers in terms of workforce planning and succession management. Additionally, when employees under save, it can lead to higher stress levels, increased medical expenses, and overall anxiety, which can negatively impact productivity and morale within the organization.
Designing a Cost-Effective 401(k) Plan
Tailored 401(k) plan design is a strategic way to reduce the financial strain associated with delayed retirement and inadequate savings. By aligning 401(k) plans with the unique needs and objectives of both employers and employees, companies can achieve cost savings across multiple areas.
- Auto-Features: Soon to be mandatory for all new plans, automatic enrollment and escalation features are now standard. These options encourage broader employee participation, helping to distribute plan costs more effectively across a larger pool of contributors.
- Plan Types: Deciding between traditional and Roth 401(k) options can influence tax deductions now versus tax-free withdrawals later, affecting both employee and employer tax responsibilities.
- Investment Options: Offering diverse investment choices allows employees to match their risk tolerance and retirement goals, potentially lowering the administrative costs tied to managing plan assets.
- Employer Contributions: Strategically structuring matching or profit-sharing contributions can motivate employee savings while effectively managing overall plan costs.
By carefully tailoring these elements to the specific needs of their workforce, companies not only make their 401(k) offerings more appealing but also enhance cost management strategies that benefit both the employees and the organization.
Attract, Reward, and Retain Talent
A thoughtfully designed 401(k) plan is an essential tool for attracting, rewarding, and retaining employees. It enhances the company’s overall value proposition to employees and plays a critical role in drawing top talent. By providing a comprehensive retirement plan, employers can stand out in a competitive job market, strengthening their brand and reinforcing their reputation as a preferred employer.
Onboarding and Engagement
An effective 401(k) plan contributes to a smoother onboarding process, setting a positive tone for new employees. Workers appreciate hearing about their benefits outside of open enrollment periods. Our team is built to provide 1-on-1 service to help employees understand their retirement plan by incorporating ongoing education and communication, which can encourage higher participation rates.2
Moreover, by equipping employees with the necessary tools and resources to plan for their financial future, employers can boost engagement and build a stronger sense of commitment. A well-structured retirement plan can also reduce financial worries, allowing employees to focus better and be more productive at work.
Fostering Loyalty with Vesting Schedules
Vesting schedules are crucial in recognizing and rewarding the dedication of long-tenured employees. By designing vesting schedules that reflect employees’ years of service, companies show appreciation for their workforce’s commitment. This approach not only reinforces a culture of loyalty and long-term engagement but also motivates employees to remain invested in the company’s success.
Partner with Petersen Hastings for Expert Guidance
Founded on the principle of simply doing the right thing for our clients and communities, our firm began as a benefits administrator in 1962, so plan administration and consulting runs in our DNA. With our streamlined and efficient approach, we offer personalized guidance that caters to your unique business aspirations, so you can keep investing your time into growing your business.
A customized 401(k) plan that meets the evolving needs of employers and employees alike can lead to significant savings, increased employee satisfaction, and improved retention. As you work to enhance your company’s retirement plan, consider partnering with Petersen Hastings Wealth Advisors for expert guidance and support. Together, we can develop a solution tailored to your business goals, empowering your employees to achieve a more secure financial future.
Ready to take the next step? Schedule a meeting with our Retirement Plan Advisory Team of Ben Tanke and Sean O’Keefe to discuss your company’s retirement plan needs and discover how Petersen Hastings Wealth Advisors can help you create a more prosperous and secure future for your employees.
1 “Retirement planning is changing to meet the new vision of retirement.” Nationwide. 2024.
2 “EBRI/Greenwald Consumer Engagement in Health Care Survey.” EBRI. June 2024.
Past performance is no guarantee of future results. All expressions of opinion reflect the judgement of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Petersen Hastings Wealth Advisors. The information is believed to be accurate but is not guaranteed or warranted by Petersen Hastings Wealth Advisors.