Despite recent market uncertainty and volatility, Cindy Joyce tells Business 2 Community that business owners and employees who have the ability to invest in their 401k plans now will see major upside in the long term.
By establishing or enhancing 401k plan offerings, companies can ensure that their owners and employees become 401k millionaires by the time they retire. Talk about a nice benefit!
Encourage Participation!
Creating a retirement plan and encouraging participation is good business. This investment in your employees will improve retention and recruiting efforts because you’re demonstrating a commitment to your team. Additionally, it communicates that your company cares about your employees and their long-term financial goals.
Send a positive message about the value of saving for the future and in doing so, you’ll likely recruit and keep talented people to help your company soar.
401k Plan Design
Businesses can further encourage participation and retirement savings in how you design your 401k plans. Consider setting automatic enrollment for employees. You can start the automatic enrollment at a relatively low percentage, such as two percent, so all employees are saving something. If someone wants to save more, they can adjust their enrollment percentage higher. At the very least, you’ve established a baseline.
You also can set automatic escalations so that every time an employee receives a salary increase, their 401k is adjusted as well.
Finally, consider including a qualified default investment alternative (QDIA) in your plan. This can be set as a default in the 401k for employees who have not made investment choices or do not feel qualified to make investment choices. A QDIA ensures that they can still yield the benefits of the plan and won’t miss out on the savings.