Future-Proof Your 401(k) Plan: Strategies for Retaining Top Talent

Author: / 12 Sep 2023 / 401(k) Plan Information, Small Business 401k

Small business owners need to recognize the growing importance of financial benefits, particularly 401(k) plans, in attracting and retaining top-tier talent. As employee priorities shift toward comprehensive and adaptable retirement options, it’s crucial to future-proof your 401(k) offerings.

Read on for actionable steps to ensure your 401(k) plan remains a compelling and essential part of your employee benefits package, aligned with emerging trends in employee retention.

Use Surveys and Feedback for Insights

Get insights directly from your team by running anonymous surveys. These can reveal what aspects of the 401(k) plans your employees value most.

Example: If the survey shows your team loves match contributions but knows little about Roth 401(k) options, it’s a sign. You might need to educate them on Roth benefits, which offer tax advantages.

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Offer a Range of Investment Options

Not everyone has the same financial goals or risk tolerance. Offer a variety of investment options in your 401(k) plans to cater to different needs.

Ubiquity Example: Ubiquity 401(k) plans offer a range of low-cost ETFs and mutual funds. This variety gives your employees more choice in how they invest for the future.

Add a Roth 401(k) Option

Roth 401(k) options are excellent for tax diversification. They are often popular with younger employees or those who expect to be in a higher tax bracket later in life.

Ubiquity Example: Adding a Roth option is easy with Ubiquity’s customizable 401(k) plans. This feature allows employees to make contributions with after-tax dollars, which then grow and can be withdrawn tax-free.

Use Auto-Enrollment and Auto-Escalation

Automatic enrollment gets people into the 401(k) plans without them having to take the first step. Auto-escalation gradually increases how much they contribute. Both features help improve long-term savings.

Create a Vesting Schedule

A vesting schedule can keep employees invested in your company. It sets rules for how long an employee needs to stay to fully own employer contributions to their 401(k).

Example: A four-year graded vesting schedule can work well. Employees become 25% vested each year, encouraging them to stick around.

Offer Financial Education

Educated employees make smarter financial choices. Include this as part of your employee benefits to add value to your 401(k) plans.

Ubiquity Example: Ubiquity offers educational resources and customer support. You can also run financial workshops or offer one-on-one financial counseling to enhance these benefits.

Stay Abreast of Legislative Changes

Staying abreast of legal changes is essential for maintaining competitive and compliant 401(k) plans. Tax laws, federal regulations, and even state mandates can influence how you offer retirement benefits to your employees.

State-Mandated Retirement Plans

In some states, businesses are required to offer retirement plans to their employees if they meet certain criteria, like the number of employees. For instance, states such as California, Oregon, and Illinois have introduced state-mandated retirement programs that oblige businesses without a retirement plan to enroll their employees in a state-provided plan. Ignoring these mandates can result in penalties. You should learn about any state-specific requirements and take steps to make sure your 401(k) plans are compliant, both federally and locally.

Annual Contribution Limit Updates

The Internal Revenue Service (IRS) often updates the maximum contribution limits for 401(k) plans, based on inflation and cost-of-living adjustments. These changes can have direct implications on employer contributions. For example, if the IRS raises the annual contribution limits, you have the opportunity to increase your employer match or make higher non-elective contributions to your employees’ accounts. This can be a significant attraction and retention tool, adding more value to your overall package of employee benefits.

Maintain Transparent Communication

Employees value transparent communication about the nuances of their 401(k) benefits. Regular informational sessions, newsletters, or dedicated customer support can improve their understanding and use of the plan.

Ubiquity Example: Ubiquity’s platform offers user-friendly dashboards and accessible customer support, making it simpler for participants to manage their accounts and understand their investment choices.

Your takeaway? Employer-sponsored 401(k) plans are not merely a checkbox item in a benefits package; they can serve as a robust tool for attracting and retaining talent in an increasingly competitive market. By adopting a more dynamic approach, you can ensure that your 401(k) offerings are adaptable, comprehensive, and strategically aligned with both current needs and future trends.


Please refer to Important Information for details.

Take the next step – Let me help you.

Contact Jay Jacob, Sr. Retirement Plan Consultant

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© 2023 Ubiquity Retirement + Savings
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Do not sell my info
44 Montgomery Street, Suite 300
San Francisco, CA 94104
Support: 855.401.4357

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© 2023 Ubiquity Retirement + Savings
Privacy Policy
Do not sell my info
44 Montgomery Street, Suite 300
San Francisco, CA 94104
Support: 855.401.4357

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