5 Easy Ways to Streamline 401(k) Plan Enrollment
Congratulations! You’ve picked the perfect 401(k) plan for your small business. Now what? It’s time to get your employees saving!
One of the best things you can do is make sure the enrollment process is simple, clear and streamlined.
Common Enrollment Challenges
Encouraging employees to enroll in your small business 401(k) plan can be a daunting task. Some common challenges include understanding the enrollment process, selecting investment options, and deciding on a contribution amount–not to mention the paperwork and deadlines.
Streamlining the Enrollment Process
To make the enrollment process more manageable for your employees, there five top steps you can take:
1. Automate the Process
Choose automatic enrollment as a feature of your plan, admit new participants into the plan as soon as they are eligible to participate. Instead of the traditional method of waiting for the participant to meet eligibility requirements and then enrolling manually (or not – many eligible employees procrastinate or forget), this lets employers add new eligible participants quickly and easily.
You can also choose automatic escalation, a retirement plan feature that enables employees’ contributions to automatically increase by a pre-determined amount or percentage at set intervals (such as annually) until the maximum contribution rate is reached.
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2. Simplify the Language
Use clear, straightforward language that employees can easily understand, avoiding technical jargon or complex financial terms. Refer to our glossary for any finance lingo that’s unfamiliar — and share it with your employees, too.
3. Provide Clear Instructions
Enrolling in your small business’s 401(k) plan should have concise directions, including step-by-step instructions on how to access the enrollment portal, select investment options, and determine the right contribution amount.
4. Offer Incentives
Consider offering incentives to employees who enroll in the 401(k) plan, such as matching contributions or other financial rewards. This can help motivate employees to enroll and contribute to the plan.
5. Communicate the Benefits
Make sure your employees know the value of a 401(k) plan. We recommend in-person meetings, educational materials, and even email newsletters. Ensure your small business’s employees understand the importance of saving (including the benefits of compound interest). And feel free to share the Ubiquity blog with them as many of the articles cover topics of interest to individual savers!