Plan Sponsors Ask: June 2018

Jun. 4, 2018:

Q: We’d like to bolster our 401(k) plan participation and contribution numbers. What are some of the reasons people don't participate or don't contribute enough?

A: That has been the subject of recent research by the Pew Charitable Trusts. They looked at employer and employee perspectives on saving, and made some interesting findings. For example, 2/3 of employees at small to midsized companies have access to a retirement plan at work, and 68% participate. That translates to 45% of workers at small to midsized businesses participating in a 401(k) or similar plan — and 55% not participating. The research found it much more likely for employees with a household income over $100,000 to participate than for lower income workers. They may find it easier to save, and are more likely to need the tax breaks associated with saving in a qualified plan. Even though auto features tend to increase participation and contribution levels, a significant percentage of plans at small to midsized companies don’t use them. The concern is often that employees won’t like it — a perception that has been refuted by other research. Take a look at the Pew website for more information: www.pewtrusts.org.

Provided by Doug Fletcher - Prepared by Kmotion, Inc. Copyright 2018.

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