In many small employer 401k plans, those pressures combine with poor vendor selection, weak oversight, and minimal participant education to create environments where employees pay more and get less.
Tag "auto-enrollment"
Making matters worse is the changing regulatory environment once the new SECURE Act 2.0 rules become effective. The good news is the dust settles after that.
Plan sponsors ought naturally to know how the plan addresses the needs of their business, but do they really know how to tweak the plan to improve outcomes?
This isn’t a compliance audit, it’s an operating efficiency audit. That covers plenty of ground, from technology to benchmarking the value offered by the service provider.
In the spirit of the season, one might even think of this as “tricking” employees to save. Plans sponsors are already using these tricks.
Participation is one thing. It’s critical that retirement savers build on the momentum of participation and use that to increase the amount of dollars that get contributed to their article. How can plan sponsors facilitate this?
How strong an argument is there for auto-enrollment? Remember, the key feature of the 2006 Pension Protection Act was to encourage auto-enrollment. The SECURE Act has even stronger language.
Overall, nearly 1 in 5 companies still have not adopted auto-enrollment. There are common reasons why companies would not include auto-enrollment in their plans.
So what if a few very high net savers end up with bigger retirement plans? Good for them. The point is to make it easier for more people to save more.
401k Christmas Wish List
Viewed through that lens, a 401k Christmas wish list isn’t just about outcomes, but about predictability. A stable rulebook can make it easier to design, monitor, and maintain plans that work in practice as well as on paper.