As a new year begins, there is often a lot going on through the minds of business owners. How do I reduce business expenses? How can I retain my employees? Is there a way to make my employees' lives easier?
For companies who haven’t reviewed their 401(k) recently, we’re often able to accomplish those top-of-mind things such as reducing costs, increasing services, making life easier for the HR team and better for all employees. Here are some tips to consider that will help ensure that your business’ 401(k) plan is maximized to its full potential.
1. Know What You Are Paying For
Owners should have a clear idea on how much they are paying their 401(k) service providers. If not, get the basics clarified. What are you paying your advisor? Your record keeper? Your administrator? Are you receiving good value compared to the market for those dollars?
Petersen Hastings offers a no obligation review and analysis of your plan to help provide clarity on what you are paying for.
2. Increase Employer Matching
One of the best ways to incentivize employees to contribute to their 401(k) plan is to offer an employer matching contribution. This means that for every dollar your employee contributes to their 401(k), your business will match it up to a certain percentage. This can be a great way to encourage employees to save for retirement, retain great talent, as well as show them that you are invested in their long-term financial success.
3. Streamline Administration
Managing a 401(k) plan can be a time-consuming and tedious task. To make the process easier, consider working with a third-party administrator that can handle the entire process for you. This will free up your time to focus on other aspects of running your business, while also ensuring that your employees’ 401(k) accounts are managed correctly.
4. Update Investment Options
Make sure to review your 401(k) plan’s investment options regularly to ensure that they are up to date. You might also consider looking into adding more diverse and low-cost investment options to increase investment choice flexibility for your employees.
5. Have Your Advisor Help Tell the Story of Your Retirement Plan
Employers and employees might have a great working relationship, but sometimes employees need to hear financial news from a less familiar source. "We have a great 401(k)!" might be true, but it might be taken with a grain of salt by some employees when it comes from the boss’s mouth.
Having a third party, such as your advisor, talk to employees about the great benefits of your 401(k) can be more helpful and add value and confidence that employers might not be able to provide.
It is important to find a level of understanding with your employees. Employers often get frustrated when they don't feel like employees appreciate the work owners put into their 401(k) or that they pay the fees for the plan.
If communicated clearly, employees will show excitement and appreciation when their 401(k) improves or fees reduce. And on the flip side, it is also common to experience employee frustration when they learn their fees are increasing or their match contribution is reduced.
It may not be said out loud but rest assured that employees do appreciate the work you have put into their benefits package. By following these tips, you can help ensure that your business’s 401(k) plan is maximized and that your employees are given the best opportunity to save for their retirement. A strong retirement plan can be a major benefit for employees, as well as increase their loyalty to your business.