Plan sponsors often wonder how to nudge their employees to save more in their 401(k)s. Inadequate contributions can lead to problems later, if employees don’t consider their long-term retirement plans.
One simple and promising strategy is to change your matching contribution formula. Rather than matching 50% of the first 6% of salary that employees contribute, consider alternate matching strategies that could be more helpful to increase employee contributions. For example, the same match budget can be used to stretch the match to 33.3% of the first 9% of salary.
This approach can help employees invest more in their 401(k)s than the traditional approach. And importantly, it nudges them toward saving more—a habit that more Americans should get into.
The right retirement plan through Riggle Wealth Group will help you recruit, retain, and reward employees as well as establish a culture of healthy financial habits within your company.
Our goal is to help you and your employees make the most of your retirement plan options and provide outstanding service every step of the way.
When you put the wellbeing of your employees first, you create more than just a name for your company, you create a legacy.
Reach out today to get answers to your questions about how to structure matching contributions, or to provide guidance on other 401(k) issues.
For use with plan sponsors only.
Get Employees to Contribute More to Their 401(k)
August 23, 2022