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Your 401(k) Had Better Shine

If you are a human resources professional, you don’t need me to tell you that top talent is on the move.

The pandemic created an unprecedented opportunity for employees to experiment with work-life arrangements, evaluate their priorities and, perhaps, grow more detached from their employer.

The signs were there. Over a quarter of workers responding to Prudential Financials’ March 2021 Pulse of America Survey said they planned to change their employer once the pandemic threat retreated (this intention was even higher among Millennial respondents, 34%).

Microsoft’s WorkLab came up with an even higher indication of pending reshuffle when they reported in their January 2021 Work Trend Index that 41% of the global workforce was considering leaving their current employer in the coming year.

Fast forward: the economy has reopened and U.S. Employers have become the most optimistic in their hiring intentions than they’ve been in over 20 years. They want to hire your employees, you want to hire their employees and at the moment, there doesn’t seem to be enough talent to go around. The scramble is on to re-engage, retain and recruit.

Enter 401(k) benefits. They can make a difference and create a competitive edge. Again, a Prudential Financial American Worker Survey suggests that among workers with access to employer-provided benefits...

Now more than ever, it helps to be the employer who has a standout retirement program that demonstrates a commitment to employee financial resiliency.

How does your 401(k) measure up?

As a retirement plan advisor, when I suggest that we benchmark an employer’s 401(k) plan, most employers immediately think about assessing plan costs. That’s important fiduciary responsibility and a great first step, but what about benchmarking the plan’s design and features?

Full James Bond Mode

When you are recruiting, who are you competing against? Or, putting it another way, whose employees would you like to recruit? When you’ve identified three or four such employers, it’s time for some reconnaissance. You may be surprised how much data is publicly available on the retirement plans of organizations that employ 100 or more employees. Your advisor can help you gather it through resources like Form 5500 filings and auditors’ reports published on or through data aggregating services like BrightScope. I’ve even been surprised by how easy it is to locate a plan’s enrollment kit or Summary Plan Description through a simple Google search and gather insights through employee comments on

When doing your research, look out for the following:

  • Eligibility requirements
  • Employee contribution types: pre-tax, Roth, after-tax
  • Employer contribution types, formulas, funding frequency
  • Vesting schedules

How do your plan’s provisions compare? I recently partnered with a plan service provider to compile this type of competitor research for an employer. The result was a pleasant surprise; the service provider’s current match formula and vesting were more competitive than anticipated. That’s the knowledge they can leverage.

Frequently, advisors and some plan service providers, also have access to national normative data for these same plan provisions, so you can assess how your plan and your competitor’s plans measure up against plans across your industry.

A Measure of Commitment

Since a whopping majority of workers claim they will be more committed to an employer who is committed to their financial resiliency, be sure your 401(k) plan reflects that commitment. Set up a meeting with both your plan advisor and plan service provider to review your plan design and service offerings and get their input on what can be added or changed to enhance your employees’ control over their financial lives. For example, they can help you determine if you’ve made it convenient for employees to get their retirement savings on a track to sufficiency:

  • An employer contribution design that encourages higher rates of contribution
  • Automatic enrollment at a contribution rate that maximizes the employer contribution
  • Automatic escalation that gets the employee’s contribution to a level that can lead to success
  • A default investment arrangement that is well-diversified and flexible enough to be suitable for your entire workforce

A Well-Stocked 401(k) Toolkit

There are many possible plan features that add value to your retirement plan. Not every feature works well for every workforce or every plan situation, but benchmarking entails staying informed on what is available and considering its’ potential for your employees:

  • Roth contributing
  • After-tax contributing with Roth conversion capability (i.e., “back door Roth”)
  • Student loan repayment-based matching contributions
  • An in-plan retirement income solution
  • A managed account feature / in-plan advice
  • Self-directed brokerage
  • A well-curated roster of index (passive) and actively managed investment alternatives
  • Robust online planning tools and mobile application access.

The Human Element

The benchmarking process is how you identify what your 401(k) plan needs to help you re-engage, retain, and recruit in this intense hiring market. Still, any resulting plan enhancements may be toothless without the human element: someone to educate your employees on how to apply these plan features to their financial situation. Have you lined up any of the following to help you provide this support?

  • Your plan advisor
  • Educators from your plan service provider
  • An employee coaching service

Perhaps a combination of the above? Now imagine describing this retirement program and level of support to your existing workforce and your potential hires. Your commitment to employee financial resiliency and your 401(k) will shine.

Investment advice offered through OneDigital Investment Advisors, an SEC-registered investment adviser and wholly owned subsidiary of OneDigital.