1. Select the right plan design

It's important to work with a provider who offers you the flexibility to design the right plan for your company – not just today, but also down the road as your company may expand (or contract). With or without the help of a financial advisor, your plan can be customized to meet your needs as well as entice employees to participate. Options include:

Matching: Many matching formulas are based on a discretionary employer contribution and, if needed, can be temporarily or permanently discontinued without rewriting the plan documents. To incentivize employees to save more, you might consider a match structure of 50% of the first 8% of the amount your employees contribute to their plan. This encourages employees to save more, yet the employer commitment is just 4% of your employees' aggregate contributions.
Profit-sharing: This allows your employees to share in the successes of the company, while giving owners flexibility in how much they contribute since it is discretionary and can be changed each year.
Safe harbor matching: Safe harbor plans are exempt from nondiscrimination testing requirements, an appealing proposition for many small businesses. While a safe harbor plan requires a defined company contribution and immediate vesting, it can help you avoid penalties and costs associated with testing, making it one of the more popular choices.
Vesting: Selecting the right vesting schedule can help with employee retention or encourage participants to dive right into saving.
Auto-enroll and auto-increase: This has become a popular way to encourage saving, so much so that even state plans are beginning to mandate auto-enroll and auto-increase features. Why? Because while many employees neglect to enroll in their benefits, it's often due to lack of education or understanding…or simply because they forget! Yet when employees are auto-enrolled, they often fail to notice the small post-tax deduction despite the large impact it can have on their future. Consider starting auto-enroll at an amount that won't have a significant impact on your team's take-home pay, and add the auto-increase feature to bump them up one percent per year. Generally, the industry recommends that individuals save 15% of their pay to attain a comfortable retirement and both auto-enroll and auto-escalate have been proven to help them get there.

2. Invest in a successful rollout

While taking the time to design your retirement plan is important, the way you introduce it to your employees is key to a successful plan. Employees often require help understanding their benefits and crave the education and tools to make smart financial choices. Consider an enrollment meeting hosted by your advisor, if you have one, or your recordkeeper, and create the right communication stream to encourage attendance. Talk your employees through the benefits of saving, as well as how you're making it easier for them to do so. Ensure they have ongoing education at their fingertips as well. Saving starts with enrollment, but it doesn't end there!

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Getting the most out of your retirement plan -- for you and your employees

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