Open enrollment is the perfecttime to bring the company retirement plan top of mind foremployees, as well as help them stay on target for saving. (Photo:Shutterstock)

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During open enrollment, employers typically focus on benefits like health care, dental and grouplife insurance, but there is an overlooked area left out of thesediscussions and materials: retirement benefit information.

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Once an employee elects to contribute to the retirement plan,they do not need to re-elect to be part of the plan movingforward.

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However, I would argue that inertia, the tendency to remainunchanged, is a universal problem with retirement accounts, andemployers are missing an opportunity to promote their greatretirement plan benefits during open enrollment and get the plantop of mind for employees.

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There are strategies plan sponsors can use to help promote theirretirement benefits during open enrollment to showcase the valuethey're bringing to employees, which not only helps with retention,but also arms employees with the information they need to improveretirement outcomes.

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Here are a few ways plan sponsors can better promote retirementbenefits this time of year:

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Highlight employer-matching contributions –Many employers match employee contributions in their definedcontributions plans.  Like health insurance, employer'sfinancial commitment to their employees' benefits are oftenoverlooked in the total compensation package.

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Annual open enrollment is a good time for plan sponsors toillustrate the commitment to their employees. Employee retention isa real issue, especially in the competitive job market that existswithin strong economic times, and educating employees about totalcompensation will benefit employers by helping retain toptalent.

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Make it easy to maximize contributions – Everyyear, the IRS annual contribution limits can be adjusted. Manyemployees are looking to maximize their contributions toward theselimits.

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Employers should make it as easy as possible for employees to dothis. For example, during open enrollment, allow employees to checka box in order to maximize their contributions.

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This type of strategy offers employees an easy method to provideequal contribution payments that add up to the most gain.

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Employers also benefit, as many employees may otherwise select acontribution rate higher than IRS limit which leaves the employerresponsible for returning excess contributions. By removing thischallenge, employers are left with less administrative burden andliability.

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Explain the difference between pre-tax and Rothcontributions – Over a career, federal tax policy andindividual tax issues change. For years, the advantages of definedcontribution retirement plans have been touted as saving on taxesand allowing retirement assets to grow tax-deferred.

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However, the mindset of receiving the immediate tax benefit orpre-tax contribution may not be the best option for everyindividual, and some may prefer to take the tax hit now.

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Employers should make their employees aware of the differencesbetween traditional and Roth structures so they can better selectan option to meet their needs.

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For example, my son recently started working. His tax liabilityis near zero, so he would not benefit much from a pre-taxcontribution. Conversely, my liability will not decrease during myretirement years, as pointed out by my advisor, and I would benefitmost by paying taxes while working.

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Employers that allow Roth contributions in the retirement planshould make the differences between pre-tax and Roth contributionsknown during open enrollment, and allow their employees a simpleway to elect which options works best as they work toward theirunique goals and objectives.

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Implement automatic features – Modern plandesign features, such as auto-enrollment and auto-escalation, havehelped individuals better save for retirement.

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Auto-enrollment is a good way to help employees begin saving forretirement. However, many employers' auto-enrollment defaultelection is 3 percent, despite many studies showing most employeesneed to save 10 to 15 percent to be best prepared forretirement.

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Employers should consider this information to determine theirdefault election for employees.

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The addition of auto-escalation, increasing employeecontributions by 1 percent annually until they reach a 10 percentcontribution rate, may be another good solution and should bedisclosed during open enrollment.

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It still takes individuals 7 years to reach contribution levelsthat will get employees to their retirement goals. Employers thatdon't currently have these automatic features incorporated intotheir plan design would be wise to consider implementing themsooner rather than later.

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During open enrollment, employers should point out thatauto-enrollment does not guarantee that employees will reach theirretirement goals, but both encourage and allow employees toimmediately increase contribution to 10 percent.

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Plan sponsors should educate employees on the benefits of theautomatic features and how they can help them reach theirretirement goals.

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Most employers are generous and want to do what they can to helptheir employees, but sometimes worry about liability by providingadvice or limiting their direction.

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The items outlined above are strategies employers can considerto better showcase and highlight their retirement benefits duringopen enrollment, which will benefit both the employer andemployees.

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Troy Dryer is Vice President of BusinessDevelopment at Investment Provider Xchange (IPX), a single-sourceend-to-end solution for providers in the 403(b) and 457(b) planmarkets. He has more than 25 years of experience in the retirementplan industry, serving in various management, sales, clientrelationship management and product leadership roles.

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READ MORE:

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Can you speak 'plan sponsor speak'? –Carosa

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Top challenge for retirement plansponsors

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DC plan sponsors' focus: Long-term risks,participant retention

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