Benefits of Refreshing Your Retirement Plan Design

What if your plan design was built for yesterday’s workforce?

Imagine it’s Monday morning, and your HR director walks into your office, visibly energized. Over the weekend, they attended a retirement plan conference and came back brimming with ideas — automatic enrollment enhancements, tax credit opportunities, student loan matching programs. As you listen, you realize your company’s current 401(k) plan, while functional, hasn’t evolved in years.

You built it to meet yesterday’s needs.  But your workforce? They’re facing today’s challenges — rising costs of living, debt burdens, shifting career paths, market volatility, and longer lifespans. You start thinking: “If we could make our retirement plan a true asset, not just a checkbox, what would that look like?”

That’s where we come in.

Why now is the time to refresh

A well-structured retirement plan isn’t just an employee benefit, it’s a strategic advantage. A modern 401(k) plan can help you attract and retain top talent, enhance employee financial wellness, and streamline administrative responsibilities. As employees’ needs evolve and regulatory changes take effect, your plan must remain competitive and aligned with your company’s goals.

With the SECURE Act 2.0 introducing new incentives and structural updates, now is the time to evaluate your plan design. Regulatory shifts, new plan features, and enhanced tax benefits provide opportunities to improve both employer and employee outcomes.

Refreshing your plan can help:

• Enhance employee participation
• Maximize employer tax incentives
• Strengthen fiduciary best practices

Plan design features that make an impact

1. Automatic enrollment and contribution escalation

Streamlining the enrollment process through automatic enrollment encourages participation and supports better savings habits. Employers can set a default deferral rate (typically 3-10%) and implement automatic escalation, gradually increasing contributions up to 15% of pay.

How it benefits employers:

• Simplifies employee decision-making, increasing participation rates.
• Qualifies for SECURE Act 2.0 tax incentives ($500 annual credit for three years).
• Enhances financial security without requiring employees to take action.

2. Employer contributions: matching and profit-sharing

Offering a structured matching formula or profit-sharing contribution can boost employee retention while helping your employee benefits package remain competitive. Safe Harbor contributions, for example, allow businesses to bypass nondiscrimination testing while providing a predictable benefit.

Options to consider:

• Traditional matching: Encourage participation by matching employee contributions dollar-for-dollar or with a tiered formula.
• Non-elective contributions: Contribute a fixed percentage to all eligible employees, regardless of participation.
• Profit-sharing plans: Reward employees based on company performance, offering flexibility in contributions.

3. Roth contributions and after-tax savings options

With tax diversification becoming an increasing priority, offering traditional pre-tax and Roth contributions gives employees the flexibility to choose their preferred tax strategy. Employers can also allow after-tax contributions, enabling high-earning employees to maximize savings potential.

Why it matters:

• Expands employee savings options and tax planning strategies.
• Enables higher savings rates through after-tax contributions with in-plan Roth conversions.
• Attracts a financially savvy workforce looking for retirement flexibility.

4. Expanding investment options

A well-diversified investment menu helps employees have access to choices that align with their risk tolerance and retirement goals.

Key Considerations:

• Target-date funds (TDFs): Simplifies investing through an age-based allocation strategy.
• Core fund lineup: Provides a mix of equity, fixed income, and stable value funds.
• Managed accounts: Personalized investment management tailored to the employee’s goals, risk tolerance, and time horizon, delivered by professional advisors for a fiduciary-aligned experience.
• Self-directed brokerage accounts (SDBAs): Allows additional investment choices for sophisticated investors.

5. Addressing emergency savings and loan features

Recognizing the financial realities faced by employees, plans can integrate emergency savings accounts or allow penalty-free hardship withdrawals under specific conditions.

Plan enhancements to consider:

• Student loan matching: Employer contributions tied to student loan repayments, helping employees save while paying off debt.
• Emergency savings accounts (PLESA): Up to $2,500 in tax-advantaged savings for financial security.
• Hardship and emergency withdrawals: Access to funds without penalties for qualifying life events.

6. Portability and retirement income options

To support long-term retirement readiness, plan sponsors can implement features that facilitate seamless rollovers and sustainable income strategies.

Enhancements for employers and employees:

• Auto-portability: Helps employees consolidate accounts when changing jobs, preserving retirement savings.
• Guaranteed income options: Annuities or structured payout options for predictable post-retirement income.
• Flexible withdrawal strategies: Allows retirees to customize distributions to align with tax planning and financial needs.

Take a proactive approach to plan design

Optimizing your 401(k) plan is not just about compliance; it’s about creating a retirement benefit that meets the evolving needs of your business and employees. A well-designed plan enhances financial security, supports talent retention, and aligns with regulatory best practices.

Next steps:

• Assess your current plan: Review participation rates, investment utilization, and employer contributions.
• Explore legislative opportunities: Leverage SECURE Act 2.0 provisions for additional benefits.
• Engage a fiduciary advisor: Partner with experts to navigate compliance, plan design, and employee engagement.
• Communicate changes effectively: Educate employees on enhancements to drive awareness and participation.

Let’s build a better retirement plan together

Your company’s retirement plan has the power to do more than meet fiduciary standards, it can drive business performance, enhance employee satisfaction, and support financial well-being across generations.

If you’ve been waiting for the right time to revisit your retirement plan design, this is it. Whether it’s adjusting for new legislation, aligning with talent strategies, or embracing innovation, a proactive refresh can elevate your plan’s impact.

Let’s make your retirement plan a strategic asset. Contact us today to explore how we can design a plan that meets your company’s goals — and gives your employees a stronger financial future.

Contact us today to start the conversation.