A retirement plan is one of the most important benefits that businesses or organizations provide to their employees. As the employer, you want to make sure that not only your workplace plan is optimal as possible but also one that you and your staff can be proud of. Research shows that when employees are on track financially, they have greater job satisfaction and loyalty to their organization. So how does your organization’s retirement plan compare? To find out, let’s dig a bit deeper.

Immediate Eligibility

Look to allow employees to make salary deferrals immediately upon hire. Many plan sponsors are still utilizing three (3) months, six (6) months or even one year waiting period, but that is slowly going away.

Employer Match

If your business or organization can afford to provide employees with matching contributions, it makes your plan that much better (i.e., more competitive). Remember that any contribution you make as the employer is tax-deductible.

Maximum Contribution

Allow employees to contribute the maximum permitted by the IRS for the year without any restrictions. For 2021, employees can sock away $19,500 ($26,000 if age 50 and over). Many employers put a cap on how much an employee can sock away, but that’s a thing of the past.

Roth Contributions

Most plans allow pre-tax deferrals by default. More and more 401(k) and 403(b) plans are also allowing Roth after-tax feature into their plans. Why? Because younger employees are asking for it.

Low Fees or the Plan Sponsors Picks Up the Tab

While most businesses or and organizations these days are sharing plan expenses with their employees, it is not unusual for employers to pick up the full tab. If your organization can afford to pay all expenses, employees will appreciate it. Just be sure to let the staff know!

Loans and Hardship Withdrawals Permitted

You may want to make loan and hardship features available to your plan, if not already. Why? Because life happens, and some employees may not have any other option but to access their 401(k) or 403(b) funds. Most plans do allow these features, but some don’t because they believe (rightly!) that retirement savings are intended for golden years and not for general use. Of course, whether your plan allows or doesn’t allow these and other features will depend on the philosophy of your organization.

Ability for You and Your Employees to Process Transactions Online

You want to have the plan set up so that your employees can request loans and distributions online, and you can approve them online. Generally, these transactions can also be done on paper, but why waste paper if you don’t have to?

Individual Investment Advice Service Provided

You will want to make sure investment questions from your staff does not go unanswered. For that reason, engaging an experienced financial advisor is critical. He or she will also help you benchmark your plan and ensure you’re paying lower fees. Many employers believe that they can answer an employee’s investment questions themselves; sure, but doing that poses the business and the individual giving financial advice to fiduciary liability.

Final Words

Outsourcing 401(k) or 403(b) administration is a great way to offer a solid plan with the qualities that your current and future employees are looking for. Look for a 401(k) and 403(b) specialist who provides innovative plan design and options, including eligibility, matching contributions, vesting, and profit-sharing. At NESA 401(k) and 403(b) Experts, we strive to help hard-working Americans secure a brighter financial future. We do that by helping businesses and organizations set up and manage retirement plans. With 10+ years of experience, our innovative plan design expertise and technical know-how combined with client-centric support, shapes retirement plan outcomes that employers and their most valuable asset—employees—deserve.

You knew there was going to be a marketing pitch somewhere?