Running a 401k or 403b plan can be daunting with most administrators just trying to keep their heads above water. A 401k plan sponsor attending a TPSU program held at Loyola University explains some simple steps she took to increasing assets and participation at her 500-employee property management company’s 401k plan.
The HR manager attending TPSU has challenges with lower wage workers who have trouble saving for retirement with many living paycheck to paycheck. Using auto-enrollment at 6% for new employees means that workers don’t miss the money right from the start. She also encourages employees to put a percentage their pay increases into the plan.
Another tactic she is considering is the saver’s tax credit. Depending on their income, workers can get an additional $1,000-$2,000 tax credit if they participate in their employer’s retirement plan. According to a Transamerica survey, less than 25% of these people are even aware of this benefit because it’s not in the IRS 1040EZ Form. Workers earning up to $30,750 in 2016 are eligible; the income for heads of households is $46,125 and $61,500 for married couples which makes up an estimated 70% of workers eligible.
Changing or just reviewing services provided by the plan’s record keeper is another way to potentially improve the DC plan. The HR professional attending TPSU conducted a thorough review of their record keeper when she was first hired and decided to make a switch which resulted in lower fees and better investments. Assets in the plan have risen from $4 million to $10 million and participation is at 80%. Oftentimes, just the exercise of reviewing service providers and advisors can help the company focus on how to improve the plan for employees as well as the company.
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