Benefit advisers hoping to help employees achieve retirement readiness should be paying attention to these top 401(k) plan trends:
- Employer Matching Stretching
- Employers are making a smaller matching amount for a greater percentage of the employee deferral. For example, matching 50% of the first 6% of the employee’s contribution was the most common matching formula in the past but some employers are changing their matching contributions to be 25% of the first 12% of the employee’s contribution.
- Re-Enroll Everyone Every Year
- Plans that use auto-enrollment and annual re-enrollment have plan participation rates in the 90% range. Although participants can opt out of re-enrollment, the majority do not.
- Using Personalized, Online Employer Education
- As plan participants have different retirement goals, employee education is being done more online since it is more personalized. Participants can view 5 to 7 minute videos that teach about retirement education.
- Add Roth 401 (k) Features
- It is now possible to convert pre-tax 401 (k) accounts into Roth 401 (k) accounts. More employers will be amending their plans to allow this.
- Employees Paying More Fees
- More plan sponsors are passing on the recordkeeping cost to plan participants. Only 23% of surveyed employers pay the entire recordkeeping cost. We expect to see more employers passing on this cost to participants.
If you have any questions about your Company’s 401 (k) Plan, or have an employee benefit plan that needs an audit, please contact Maria Arriola at 714.672.0022.
