401k Plan Advices for Employers
Before providing your employees with the possibility of contributing to a retirement plan, you should carefully consider the following issues that surround the construction of a 401k plan.
- Cost of Implementation
When deciding on offering your employees a 401k plan the cost of implementing such a plan should be considered. Since there is a trend in this field of companies offering funds that match employees' contributions, you should not lag behind and consider this as well. You should also make a detailed study of the salaries of your employees and check for employees that have high salaries. Those are the potential target group that is highly likely to contribute to a 401k plan.
- Time and work surrounding the establishment of a 401k plan
The construction of a beneficial 401 (k) plan requires a substantial research, which may take a significant amount of time. Additionally, you should check for the available choices in order to construct an effective and efficient 401k plan. Finally, you should see whether you have the qualified administrators for the management of the plan and if not to recruit such.
- Investment opportunities provided
Since 401k plans operate with the employees' accumulated money, you should carefully consider the different alternatives for investment so that higher returns are obtained.
When you have done all of the preliminary work and decided on a particular structure of the 401k plan opportunity, you should see whether your choice coincides with the companies goals and mission. Additionally, consider the compensation packages of your employees and how the 401k plan will supplement them. Some marketing work is also required in order to acquaint both your current and potential employees.
Enhancement of Already Existing 401 (k) Plans
If you have already set a 401k plan for your employees, there are ways in which you can further enhance their impact. The following list provides advices for these purposes.
- Acquaint your employees with the benefits of investing in a 401k plan.
It has been proven that when employees see and understand the benefits of contributing to a 401k plan they are more likely to do it. Therefore, you should allocate the necessary and sufficient time to educate your employees on the benefits they will obtain from such a retirement investment. As a result your employees will become more committed and affiliated to the company's culture. You should clearly show them the real value of their packages and how they affect them personally.
- Specific topic communication and advice required.
In order to win the support of employees for 401k plan, you should provide them with targeted discussions and give them specific recommendations whenever they need such. High employer contribution match can further motivate them to make the necessary steps toward 401k plan investment. Nevertheless, the latter can incur you higher costs. So, giving your employees targeted communication represents a cheaper and at the same time more effective way of winning support for the 401k plan idea.
- Frequent update of 401k plan information
The department responsible for the constant update and enrichment regarding 401k plan information is the Human Resources. They should be acquainted with the peculiarities, such as design and value, of the retirement plans and be able to explain them to the employees when addressed.
They should be able to provide information about the reasons for this exact 401k plan choice and the cost that the employer incurs for the provision of these packages. Additionally, the Human Resources should be able to clearly identify the specific aspects of the corporate culture and strategy supported by the 401k plans.
- Competitors' 401k plans
Since almost every company today offers its employees a sort of a retirement plan, you should be on the watch of the offers of your competitors in order not to lag behind. You may lose some of your most valuable employees due to a more competitive retirement plan offered by another company.
- Information about investment opportunities
Since you may include the opportunity of choosing their own investments in the structure of the 401k plan, employees should receive regular information on the various investment opportunities the market offers. This can be done through the organization of special lectures or online courses given by specialists from the field. Additionally, the issuance of brochures and other written material should be considered discussing such topics as compounding interest effects, mutual funds, stocks and bonds and etc.
Prove your employees the benefit of an early start in investing in 401k plans. You should try not to influence their investment choices, just provide the necessary information for competent investing.
- Ongoing meetings with financial advisors.
These appointments will give the employees the opportunity to make the necessary revisions of their 401k plan performance and take the necessary actions to enhance its effects.
You should allocate the needed time and efforts to acquaint your employees of 401k opportunities. They will surely appreciate your attempt and respect you as a valuable employer, for whom it is a real pleasure to work.
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