The employee benefits and 401(k) plan you offer shouldn’t just create value for your employees; they should drive results for your company as well.
When designed and managed effectively, your employee retirement plan helps create tax advantages for your company and boosts your employee retention and recruitment efforts. To get the best results from your plan, you need a provider committed to your success and to offering both your company and your employees a high level of service.
Learn how to evaluate if you’re getting the support you need from your provider and deriving enough company benefits from your employee 401(k) plan.
Employee 401(k) Plan: What You Should Expect
The key benefits your company should expect to gain from your employee retirement plan are:
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Tax Benefits: If reducing your corporate tax burden is a priority for your finance department, your employee retirement plan is a valuable tool. The amount you spend on the plan and the matching contributions you offer both work to reduce your tax burden. Of course, there are also tax benefits for your employees, as their contributions are tax deductible and the gains made in their accounts are tax deferred.
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Employee Retention And Engagement: Your plan should provide motivation for your employees to stay with your company and work toward its success. If your employees don’t understand the value of your plan and how it’s superior to the plans your competitors offer, you might miss out on this benefit.
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Employee Recruitment: When you offer a highly attractive retirement plan and are able to communicate its value, this can be a powerful motivator for talented employees to join your company.
To gain any of the benefits outlined above, you need high participation rates in your employee 401(k) plan. If your rates are less than 80%, you might have a problem. If your rates are less than 50%, you’re experiencing little (if any) value from your plan.
If your participation rates are low, you need to find out why.
Questions To Ask Employees About Your 401(k) Plan
The best way to find out if your plan is delivering enough value is to ask your employees about it. This helps you understand what challenges you face when it comes to plan participation, as well as whether employees are satisfied with the plan.
Ask employees who participate in your 401(k) plan the following questions:
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How regularly does the plan advisor meet with you?
Ideally, plan advisors should meet with employees quarterly to answer questions and help them make decisions and changes related to their accounts.
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How easily are you able to find out information about your 401(k) account?
If your employees only have intermittent access to information about their accounts, they may forget about the plan or put it in the back of their minds. To really strengthen your employee retention, you need the plan to be on your employees’ minds.
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Is your account’s performance meeting your expectations?
If your employees are not seeing growth in their investments, they may not feel satisfied with the plan or motivated to continue participating.
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How does your plan compare to those of your peers?
If your plan isn’t measuring up to the plans their family and friends have, your employees are likely to feel dissatisfied.
You may also want to discuss your employee retirement plan during exit interviews and track whether exiting employees participated in the plan. This should give you some direct insight into whether your plan strengthens employee retention efforts.
Discuss Your Employee 401(k) Plan Performance With Your Provider
Once you have a clear idea of how your plan is performing and whether your employees feel satisfied with it, speak to your provider about any concerns you may have.
Ideally, you set clear metrics and expectations when you signed on with your plan provider. Check the level of service and performance you’re receiving against those metrics and expectations.
Your employee 401(k) plan should be creating significant value for your employees and helping your company meet its objectives. Measure your plan’s performance with the information above to determine if you’re deriving enough value from your plan.
Explore how retirement benefits impact employee retention by reading our free e-book, Make Retirement Benefits Your Secret Weapon For Employee Retention.
