Understanding Eligibility and Vesting Strategies

Fred Barstein with Plan Sponsor, Tracey Ann – HR Manager 

Navigating your company’s retirement plan often involves grasping two vital elements: eligibility and vesting schedules.  Eligibility criteria, often dependent on factors like age or employment duration, determine when you can enroll in the plan, ensuring dedicated employees gain timely access to valuable retirement benefits.

Concurrently, vesting schedules dictate when you achieve full ownership of employer-contributed funds, playing a pivotal role in talent retention and loyalty.  Some companies adopt immediate vesting, granting ownership right away, while others choose graded vesting, allowing gradual ownership over time.  These schedules are strategically employed to inspire long-term commitment, transforming employer contributions into a meaningful retirement benefit for employees choosing to stay.  Clear communication of these eligibility and vesting details empowers employees to make informed decisions about their retirement planning.

During The Plan Sponsor University (TPSU) Fiduciary Education Program held in Boca Raton, Florida, at Florida Atlantic University, Fred Barstein, CEO and Founder of TPSU and 401kTV, interviews Tracy Ann, the Head of HR for a Florida company with 250 employees, after a TPSU program in Boca Raton.  Tracy discusses her organization’s approach to retirement benefits, emphasizing immediate eligibility for new employees and a two-year vesting schedule. She notes that this strategy has been effective in recruitment, conveying the organization’s dedication to its employees.

Read the Full Transcript Here:

Fred Barstein:

Greetings. This is Fred Barstein, CEO and Founder of TPSU and 401kTV. I’m here in Boca Raton at Florida Atlantic University, where we just completed a TPSU program. I am here with Tracy. Welcome, Tracy.

Tracey Ann:

Thank you so much, Fred.

Fred Barstein:

Okay. If we ask you a few questions?

Tracey Ann:

Certainly.

Fred Barstein:

Very good. So before we start, tell us a little bit about yourself and your role at your organization.

Tracey Ann:

Okay. Well, I’m Tracy Ann, and I’m the head of HR for a company in Florida with 250 employees.

Fred Barstein:

Great. So Tracy, there’s always a lot of discussion about when people are eligible to be in the plan, as well as the vesting schedule. What does your organization do?

Tracey Ann:

So for us, we went to immediate eligibility, so no waiting period for new employees, which we have found works very, very well.

For vesting, we vest over two years. So for the first year it’s 50%, and in the second year it’s 100%.

Fred Barstein:

Why did you do that?

Tracey Ann:

So we really found that when we say to, not only existing employees but also persons we’re trying to recruit, that we offer this kind of plan, they felt that the organization actually cared more about their employees. So that was a very big selling point for us.

One of the things we communicated, which is true, is we say to them when you come into the organization, we expect you to be fully dedicated, to work very hard. We feel that on our part, we should be equally dedicated and ready to put our money in a place that benefits you.

Fred Barstein:

That’s great. So do people appreciate that?

Tracey Ann:

Oh yes, definitely. A lot of persons appreciate it and we have found that that goes right across the organization, from the very high levels to persons who are in our shop floor, kind of blue collar workers. That works very well also.

Fred Barstein:

It’s also as compared to everyone else who is doing five year or-

Tracey Ann:

Correct.

Fred Barstein:

Longer vesting. That’s great. So final question, Tracy. TPSU, what did you learn and would you recommend it?

Tracey Ann:

Yes, I would definitely recommend TPSU. I think I have been to one of your programs before, but for today I learned, I mean very specific things. So the group discussion that we had over lunch, persons talking about just the ease of the 360 program, just the shared knowledge and collaboration during that session was very good.

It was very interesting to see, kind of like there was a session on below the surface and just how much impact a little bit more of investment from the company can impact somebody in either five years or 10 years after they retire. So that was really very good to see as well.

Just learning just a lot of little things, Secure 2.0 and what that will mean for next year and for 2025, that was really good things. But overall, all the sessions very well, very impacting, and I will be back.

Fred Barstein:

Very good. Well thank you and thank you for your time today, Tracy.

Tracey Ann:

Certainly.

Fred Barstein:

Thank you for watching 401kTV. Please stay tuned for more programs.

 

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