Many employees enrolling in a 401(k) for the first time hesitate because they’re unsure how contributions will affect their take-home pay. This uncertainty can be a major barrier to participation, especially for those already managing tight budgets. Providing clear, personalized projections of what their paycheck will look like after different contribution levels can help remove that hesitation. When employees can see the real impact—rather than guessing—they often realize the difference is more manageable than expected, which builds confidence and encourages higher participation and contribution rates.
At the conclusion of a recent TPSU program held at Penn State Great Valley, TPSU Founder and CEO Fred Barstein interviewed Leanne, VP of Finance at a local company with approximately 190 employees, to discuss how paycheck modeling can help improve 401(k) participation and engagement.
Leanne explained that many employees are enrolling in a 401(k) plan for the first time and are often unsure how contributions will affect their take-home pay. To address this, she uses her payroll system’s check calculator to model different contribution scenarios, including pre-tax and post-tax percentages, while factoring in overtime, deductions, and each employee’s tax situation.
By showing employees the real impact on their paycheck, Leanne has found that many become more comfortable contributing at higher levels—especially up to the company’s 6% match. She noted that once employees see the relatively minimal effect on net income, they are more likely to take full advantage of the match.
Read the Full Transcript Here:
Fred Barstein: Greetings, this is Fred Barstein, Founder and CEO at TPSU and 401kTV. Just completed a TPSU program at Penn State Great Valley, and I’m here with Leanne. Welcome, Leanne.
Leanne: Hi, thank you.
Fred Barstein: You didn’t think I remembered your name. That’s okay. Okay, can I ask you a few questions?
Leanne: Yes, absolutely.
Fred Barstein: Before we do, tell our audience about yourself and your organization.
Leanne: Hi, so my name is Leanne. I’m a VP of Finance at a local company, and we have about 190 employees.
Fred Barstein: So Leanne, you talked about today that you do modeling of your paychecks. What is that?
Leanne: So when it comes time to enroll in our 401(k), a lot of our employees—it’s their first time experiencing that—and they don’t know what the impact to their net income is going to be. So what I will do is, within our payroll system, I’m able to use a check calculator program where I can apply different percentages, pre-tax, post-tax, so they can see exactly what their paycheck will look like.
It will account for regular time, overtime, any other additional deductions they have coming out, and their own personal tax situation.
Fred Barstein: And that gets more engagement?
Leanne: You do get a lot more engagement. I find that people who are initially nervous about maybe putting in 6%, because that’s what we match at, will be much more likely to go with the full 6% once they see the relatively minimal impact to their net income.
Fred Barstein: Final question—what are a couple of things you learned, and would you recommend TPSU?
Leanne: I would definitely recommend TPSU. I attended today as the fiduciary for my company because I want to make sure I’m doing everything properly with the full responsibility that’s been put on me.
I think one big thing I took away today was learning more about best practices—what does an ideal plan look like—and some of the things I could take back to the president of the company. I would really like to implement auto-escalation.
And then another pain point is not necessarily employee engagement, but employee education that we can offer. We have a pretty hefty mix of blue-collar versus white-collar workers at our company, and I think we can tailor our education to better reach more employees.
Fred Barstein: Well, thank you for your time.
Leanne: Yep, thank you.
Fred Barstein: Thank you for watching 401kTV. Please stay tuned.
