Plan sponsors can benefit from motivated employees, and the 401k plan is a tool to achieve this motivation. What precisely can plan sponsors offer in addition to the usual company match to make their 401k plan more enticing, more attractive, more motivating?
Plan Sponsors
Just because you don’t have a fiduciary duty to other employees doesn’t mean you shouldn’t continue to think like a fiduciary.
Before you scorn the use of badges, remember, the company match is the ultimate badge. If you meet a minimum savings goal, the company awards you a “badge” of a matching contribution.
Because things happened so fast, everyday folks could see in real time how long-term financial systems unfold. In the end, this may have been the greatest lesson of all, and it came courtesy of living in the real-world economic laboratory that was 2020.
You might think you can ignore PEPs. And you might be in for a surprise.
In the end, though, you must remember the PEP is brand new. Not all offerings will offer the same advantages. Some may be designed specifically to forego one advantage to emphasize another.
Only time will tell, but the smart money is that open 401k MEP/PEPs are a game-changer. Are you planning to sit on the bench or are you suiting up and getting ready to wade in?
If plan sponsors assume things can return to the pre-Covid normal, they risk exasperating existing problems. They’re there and cannot be ignored.
The biggest issue when it comes to access is cost. It’s not just the plan sponsor’s sensitivity to higher costs. It’s the service provider’s ability to keep those costs low.
If you are responsible for 401k participant education or in any form of employee-based financial literacy program, you may want to adopt methods used by others who teach adults.
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