MENUMENU
  • FREE RESOURCES
  • PREMIUM CONTENT
        • SEE MORE
          PREMIUM RESOURCES
  • HR DEEP DIVES
        • Coronavirus (COVID-19) Resources for HR Professionals
          Employment Law
          Labor Law Posting Requirements: Everything You Need to Know
          Recruiting
          businesswoman selecting future employees on digital interfaces
          Recruiting Resources for HR & Hiring Managers
          Performance Management
          vector image of young female making star rating
          Performance Review Resources
          Employment Law
          Understanding Equal Employment Opportunity and the EEOC
          Recruiting
          Onboarding Resources for HR & Hiring Managers
  • CORONAVIRUS & HR

  • LOGIN
  • SIGN UP FREE

HR Morning

MENUMENU
  • FREE RESOURCES
  • PREMIUM CONTENT
        • SEE MORE
          PREMIUM RESOURCES
  • HR DEEP DIVES
        • Coronavirus (COVID-19) Resources for HR Professionals
          Employment Law
          Labor Law Posting Requirements: Everything You Need to Know
          Recruiting
          businesswoman selecting future employees on digital interfaces
          Recruiting Resources for HR & Hiring Managers
          Performance Management
          vector image of young female making star rating
          Performance Review Resources
          Employment Law
          Understanding Equal Employment Opportunity and the EEOC
          Recruiting
          Onboarding Resources for HR & Hiring Managers
  • CORONAVIRUS & HR
  • Employment Law
  • Benefits
  • Recruiting
  • Talent Management
  • Performance Management
  • HR Technology
  • More
    • Leadership & Strategy
    • Compensation
    • Staff Administration
    • Policy & Procedures
    • Wellness
    • Staff Departure
    • Employee Services
    • Work Location
    • HR Career & Self-Care
    • Health Care
    • Retirement Plans

These two 401(k) tweaks could bolster your plan participation

Jared Bilski
by Jared Bilski
November 13, 2015
2 minute read
  • SHARE ON

Study after study confirms that most workers aren’t setting aside nearly enough money for retirement. As a result, an increasing number of individuals are prolonging their retirement. This can have a drastic effect on employers, so is it time for firms to get more aggressive?  
At the Association for Financial Professionals Conference in Denver, HR Benefits Alert attended a presentation titled “Retirement Plan Boot Camp: Fiduciary Risk Management for Financial Professionals,” by Gary R. Johnson and Michael W. Kozemchak.
During the presentation, Kozemchak made a compelling case for why employers need be more aggressive in helping employees prepare for retirement.
Here’s the problem: Older workers cost firms significantly more in healthcare costs — as much as $6,500 per year — and have higher disability rates than their younger counterparts.
Plus, when older employees put off retirement, they hurt employers’ succession planning. Younger employees have to wait longer to move up the ranks, and some lose patience and look for opportunities elsewhere.

Stretching the standard rates

To help prevent the retirement delay, Kozemchak suggested employers look toward a change to the traditional 401(k) match structure.
The most common 401(k) match companies offer is fifty cents on the dollar up to 6% of an employer’s contribution.
Many employees will contribute up to the amount at which they can get the full match and then stop. Employers can take advantage of this by “stretching” the match. Instead of matching up to 6% of employees’ contributions at 50 cents on the dollar, employers may want to try matching up 10% or even 12% of workers’ contributions at 25 cents.
Another area in which Kozemchak saw room for improvement: auto-enrollment.
The average plan will auto-enroll employees at 3% of their salary and automatically bump up (i.e., escalate) that amount by a percentage point each year. Problem is, that low starting point puts workers well behind where they should be.
A much stronger auto-enrollment structure would start employees at 6% and bump contributions up annually until workers were in the 10% to 15% range.

Get the latest from HRMorning in your inbox PLUS immediately access 10 FREE HR guides.

I WANT MY FREE GUIDES

Keep Up To Date with the Latest HR News

With HRMorning arriving in your inbox, you will never miss critical stories on labor laws, benefits, retention and onboarding strategies.

Sign up for a free HRMorning membership and get our newsletter!
  • This field is for validation purposes and should be left unchanged.
HR Morning Logo
  • Facebook
  • Twitter
  • Linked In
  • ABOUT HRMORNING
  • ADVERTISE WITH US
  • WRITE FOR US
  • CONTACT
  • Employment Law
  • Benefits
  • Recruiting
  • Talent Management
  • HR Technology
  • Performance Management
  • Leadership & Strategy
  • Compensation & Payroll
  • Policy & Culture
  • Staff Administration
  • Wellness & Safety
  • Staff Departure
  • Employee Services
  • Work Location
  • HR Career & Self-Care

HRMorning, part of the SuccessFuel Network, provides the latest HR and employment law news for HR professionals in the trenches of small-to-medium-sized businesses. Rather than simply regurgitating the day’s headlines, HRMorning delivers actionable insights, helping HR execs understand what HR trends mean to their business.

Privacy Policy Terms of Service
Copyright © 2021 SuccessFuel

WELCOME BACK!

Enter your username and password below to log in

Forget Your Username or Password?

Reset Password

Lost your password? Please enter your username or email address. You will receive a link to create a new password via email.

Log In

During your free trial, you can cancel at any time with a single click on your “Account” page.  It’s that easy.

Why do we need your credit card for a free trial?

We ask for your credit card to allow your subscription to continue should you decide to keep your membership beyond the free trial period.  This prevents any interruption of content access.

Your card will not be charged at any point during your 21 day free trial
and you may cancel at any time during your free trial.

preloader