Employees Empowered Through Profit Sharing Plan
Tailoring employee benefits to suit individual needs is a key aspect of creating a motivated and engaged workforce, and one particular way employers can achieve this is through profit sharing. By implementing a profit-sharing component in their benefits package, employers can motivate their employees with an additional financial incentive that aligns with their performance and the company’s success.
Following the conclusion of The Plan Sponsor University (TPSU) Fiduciary Education Program at Westminster College in Salt Lake City, Utah, Founder and CEO Fred Barstein engaged in a conversation with Plan Sponsor Jake regarding the concept of “Cafeteria-style” benefits. Recognizing the need to enhance their profit-sharing component, Jake shared that their company had previously experienced a lack of employee appreciation for the 401k profit-sharing aspect. However, recent efforts have enabled employees to have a say in how they allocate their profit-sharing funds. By granting employees the autonomy to choose how they utilize their profit-sharing dollars, such as prioritizing student loans over contributing to their 401k, the company has witnessed a surge of excitement and empowerment among their staff.
Read the Full Transcript Here:
Fred Barstein:
This is Fred Barstein with 401KTV in beautiful Salt Lake City at Westminster College where we just completed a TPSU program. We’ll be doing one every six months here. And I am glad to be welcoming Jake.
Jake:
Hi.
Fred Barstein:
Very good.
Jake:
It’s good to be here.
Fred Barstein:
Okay if we ask you a few questions?
Jake:
Yeah, please.
Fred Barstein:
Very good. So one of the things you talked about was, I think, a trend we’re seeing in the market is what somebody called the cafeteria style of benefits, including retirement. So can you explain what that means?
Jake:
Yeah, absolutely. So what that means for us is we have had a matching component of our 401k and a profit sharing component for a really long time, but we kind of always felt like the profit sharing component kind of sat in the background and wasn’t fully appreciated by our team members. And so what we wanted to do is to bring that to the forefront where maybe for one team member, they would prefer to have a higher contribution towards their retirement. Maybe somebody else is more concerned with 401K loans. Or excuse me, with education loans. And so with that, what we were able to do is to give them a choice, how and where they want to spend their money. And so once a year they actually make an election about how they’re going to receive their profit sharing dollars.
Fred Barstein:
And can it also go in an HSA?
Jake:
It can, yep. And so the third thing, we’ve always been a big prop proponent of HSAs. We’ve had one for about 10 years. And so, for the longest time, it took a while to educate people to just say use this to pay for healthcare, and now we’re teaching them how to use it as a retirement vehicle. And so for those that are maxing out their 401k, this gives them one other place to maybe put some additional retirement dollars and help them save for healthcare as well.
Fred Barstein:
Triple tax benefit.
Jake:
Absolutely.
Fred Barstein:
So how’s that working? Has it really, have you seen a difference with your employees?
Jake:
So we are in the early stages of rolling it out, actually. So we just announced it as part of this opening open enrollment.
Fred Barstein:
Okay.
Jake:
But the excitement was fully focused there. I mean, people got really excited when they learned that, hey. You know what? There’s this essential 3 percent that I now have additional flexibility over.
Fred Barstein:
That’s great.
Jake:
Yeah.
Fred Barstein:
I think it’s very innovative. So congratulations on that.
Jake:
Absolutely. We’re excited about it.
Fred Barstein:
So couple of things you picked up here at the program, TPSU, that you may want to implement?
Jake:
That I’m not alone in our struggles to educate people was number one. But then I think to know that we’re not alone in coming up with those solutions. And so I think we are going to push really hard to educate people about these resources that they have and what we can do to kind of increase those contributions. I would like to see what we can do to help people or help our leadership team to feel comfortable to maybe do a little bit higher auto increase. We’ve been stuck at about 3 percent for a really long time, and to see if there might be some opportunities there.
Fred Barstein:
Very good. Well, thank you for your time today.
Jake:
It’s good to be here.
Fred Barstein:
And thank you for watching 401KTV. Please stay tuned.