Practical tips for Gen X and Millennial workers to save for retirement

Life in the middle can be a pickle—just ask any mid-career employee. They’re often caught between a rock and a hard place, or, more accurately, a kid’s college fund and an aging parent’s medical bills. Add to that the rising cost of living, and you’ve got a perfect storm for financial stress.

Life in the middle can be a pickle—just ask any mid-career employee. They’re often caught between a rock and a hard place, or, more accurately, a kid’s college fund and an aging parent’s medical bills. Add to that the rising cost of living, and you’ve got a perfect storm for financial stress.

Money and Happiness

Did you know that 59% of Americans think money can buy happiness? With the magic number being $1.2 million. Interestingly though, for a significant portion of your workforce, financial happiness is tied to timely bill payments (67%), being debt-free (65%), and maintaining a healthy work-life balance (44%), thus highlighting the connection between financial security and happiness.[1]

Of note, 73% agreed that a solid financial plan leads to greater happiness.1 Here are some ways you can help your mid-career employees through life challenges and assist them in pursuing their retirement savings goals.

Confirm Retirement Savings are on Track

Mid-career employees still have time on their side. By encouraging them to review their retirement contributions and plugging their information into a financial calculator, it could make the difference between retirement stress or retirement success.

  • 1 – 5% deferral | Potentially insufficient to replace future income needs
  • 6 – 8% deferral | Better but below recommendations
  • 10 – 15% deferral | Recommended by industry experts

Leverage Financial Wellness Platforms

We live in a digital age where there’s an app for everything, even financial wellness. By offering access to these platforms, you can empower your employees to take control of their finances. These platforms often include features like budgeting tools, financial health scores, and savings goal trackers. Adding these financial wellness apps to your employee benefits may greatly improve job satisfaction, retain employees longer, and increase workplace productivity.

Consider Family Caregiver Support Programs

Research shows that 56% of employees consider themselves caregivers.[2] Many mid-career employees are part of this “sandwich generation,” simultaneously raising children and caring for aging parents. Offering family caregiver support programs can help reduce this burden. This could be as simple as flexible work hours to accommodate morning drop-offs and afternoon pick-ups for children. It could also include more comprehensive support like resources for affordable care, aging-in-place, legal advice, and/or help with financial planning.

Because Education Isn’t Cheap

For employees who have children, one of the significant financial burdens for mid-career employees is saving for education. By offering information and access to 529 plans—tax-advantaged savings plans designed to encourage saving for future education costs—you can help reduce this stress.

However, a word of caution: as much as parents value their children’s education, it’s important to remember that while loans are available for college, the same cannot be said for retirement. So, encourage your employees to save for themselves first.

Emergency Savings, Withdrawals, and Loans

The SECURE Act 2.0 has introduced two new employee options aimed at enhancing financial flexibility:

  1. Payroll deducted emergency savings or “sidecar” emergency savings accounts:
    Non-highly compensated employees can contribute up to 3% of wages into a capped $2,500 Roth-like account. Excess contributions spill over into their Roth account. Notably, the first four yearly withdrawals from this emergency savings account are free.
  2. Penalty-free emergency withdrawals:
    Another provision allows any participant to make a one-time, non-loan withdrawal of up to $1,000 from their retirement savings for emergencies, without the usual 10% tax penalty. The process requires minimal paperwork and can optionally be repaid within three years. Because this is not a loan and requires minimal paperwork, it could save busy HR professionals and administrators time and streamline the distribution processes.

While it’s advisable to leave retirement savings untouched, life happens. Providing options for loans or hardship withdrawals from retirement accounts can be a lifeline for employees facing financial difficulties. However, it’s crucial to educate employees about the potential impact on their retirement savings to help them make informed decisions.

Leveraging Empathy

Empathy is key when helping your mid-career employees overcome these hurdles. Establish a relationship with a specialized retirement plan consultant to help understand their unique challenges. Listen to their concerns and provide them with the tools and resources needed to achieve their retirement savings goals. Remember, a financially secure employee is likely to be more engaged, productive, and loyal—factors that can significantly contribute to your company’s success.

PENSION PLAN SPECIALISTS, PC

805 Broadway, Suite 600

Vancouver, WA 98660

360-694-8409

pensionplanspecialists.com

[email protected]

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.


[1] Empower. “Financial Happiness.” Jan 2024.

[2] Bank of America. “2023 Workplace Benefits Report.” Aug 2023.

Ways to boost financial confidence and loyalty for Gen Z employees

Have you ever found yourself pondering the classic “If only I could rewind the clock and share some pearls of wisdom with my younger self” scenario? As an employer, you have the chance to share this knowledge with your employees, especially when it comes to saving for the future.

The Impact of Early-Career Saving Hurdles

While everyone encounters challenges, certain obstacles tend to affect individuals early on in their careers more than their senior counterparts. Factors such as inflation, the cost of living, student loans, and impulsive retirement plan cash outs can significantly influence their financial well-being.

Gen Z employees, aged 18-24, emphasize that their overall well-being significantly influences their productivity. Many hold high expectations of their employers, expecting them to take responsibility for their financial wellness, provide retirement income, and offer guidance on investing in their retirement plans.[1]

Let’s explore some of the challenges faced by employees in their early careers and discuss practical solutions we can help implement to empower them.

Combating the Burden of Education Debt

Now that the student loan freeze has ended, some individuals are encountering this issue for the first time, while others are readjusting. The weight of education debt can hinder the employee’s ability to contribute to their retirement savings, delaying their progress toward financial independence. Under the new rules in SECURE 2.0, employers can match contributions to retirement plans based on employees’ student loan payments. This benefits individuals with student loans who might have refrained from contributing to a retirement plan, thereby missing out on employer matches and potential long-term savings. This simplified approach removes the complexity associated with previous non-elective contribution programs, which were subject to strict design and compliance requirements.

Saving in the Face of Inflation

Additional forces such as high cost of living and inflation serve as barriers to retirement savings, but younger employees seem to have the desire to save.

To encourage saving, the IRS provides a special tax credit, offering low- and moderate-income earners an additional incentive to save for retirement. If employees qualify for the Retirement Savings Contributions Credit, or Saver’s Credit, they might reduce their tax bill by up to $1,000 ($2,000 for a married couple filing jointly).

The Gift of Time in the Market

With time on their side, even small savings increments will have time to compound. This is where automatic plan design can be a very powerful tool to nudge savings.

  • Auto-enrollment ensures that employees are automatically enrolled in a qualified retirement plan. This enhances participation while maintaining flexibility, as employees have the option to opt out at any time.
  • Auto-escalation gradually increases employees’ contribution rates over time, typically by 1 – 2% per year. This feature not only instills a savings habit but also helps employees grow their retirement savings without requiring active involvement.
  • Preventing cash outs is another way to keep employees invested. This can be done by limiting loans at the plan level. Additionally, it is an opportunity to educate employees on their roll-in and rollover options when joining or leaving the company.

Encourage younger employees to save, keep saving, and roll over their retirement assets, no matter how small. This habit will help them develop a continuous savings pattern which can set them up for a financially secure future.

Increasing Financial Literacy

Because many employees look to their employers for help with financial wellness, an opportunity exists to make an impact. By offering employee education resources or one-to-one meetings, we can help employees build financial confidence. This empowers them to make smart choices, affording them a feeling of control over their financial future.

Elevate Savings

Addressing the early-career savings hurdles requires a multifaceted approach. Employers who invest in their employees’ financial well-being not only contribute to a more secure retirement but also foster a workforce that is engaged, focused, and motivated. By exploring these solutions, companies can play a vital role in empowering their employees to overcome financial challenges, which can set the stage for a prosperous and secure future.

PENSION PLAN SPECIALISTS, PC

805 Broadway, Suite 600

Vancouver, WA 98660

360-694-8409

pensionplanspecialists.com

[email protected]

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.


[1] Bank of America. “2023 Workplace Benefits Report.” Aug 2023.

In this newsletter, we will discuss organizing fiduciary files and benchmarking your retirement plan to help you enhance your fiduciary plan governance. Plus, we explore how profit sharing can help reduce your company’s tax liability and express gratitude towards your employees.

By implementing these strategies, you can further strengthen your fiduciary governance practices and contribute to the long-term financial well-being of your employees.

Please don’t hesitate to reach out to our team. We are here to support you every step of the way.

PENSION PLAN SPECIALISTS, PC

805 Broadway, Suite 600

Vancouver, WA 98660

360-694-8409

pensionplanspecialists.com

[email protected]

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.

It is more important than ever to prioritize the security of your company’s retirement plan. The Department of Labor (DOL) has recognized this urgency and has issued recommendations to help employers safeguard their plans.

For plan fiduciaries, there are many ways you can apply these best practices to effectively manage your company’s retirement plan. Read the checklist below and for more detailed information, refer to the full ‘Cybersecurity Program Best Practices – EBSA’ document here.

By implementing these guidelines and incorporating cybersecurity best practices, you can significantly mitigate the risk of cyber threats such as data breaches, fraud, and theft.

PENSION PLAN SPECIALISTS, PC

805 Broadway, Suite 600

Vancouver, WA 98660

360-694-8409

pensionplanspecialists.com

[email protected]

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC.  All rights reserved. Proprietary and confidential.  Do not copy or distribute outside original intent.

The SECURE Act 2.0 is giving business owners an opportunity to start a retirement plan with three enticing tax credits. Learn more about credits to offset startup costs, automatic enrollment and employer contributions.

With these tax credits, business owners can confidently set up a retirement plan, save money and thrive in an ever-changing economic climate.

PENSION PLAN SPECIALISTS, PC

805 Broadway, Suite 600

Vancouver, WA 98660

360-694-8409

pensionplanspecialists.com

[email protected]

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC.  All rights reserved. Proprietary and confidential.  Do not copy or distribute outside original intent.

While your retirement plan may not have a chirping reminder, regular reviews, fee benchmarking, and a prudent process are key.

Just as we routinely replace the batteries in our smoke detectors, it’s equally crucial to give your company’s retirement plan the attention it deserves.

Often, qualified retirement plans are treated like a smoke detector with fading batteries – they’re there, we know they’re there, but unless there’s an alarming beep, we don’t really bother to examine them in detail. But just as you wouldn’t overlook a chirping smoke detector, you shouldn’t neglect your company’s retirement plan, either.

As a plan sponsor, it’s vital to regularly review your retirement plan and benchmark for fees, services, and overall value.

Striking the Right Balance

Every employer has unique needs and preferences for the company’s retirement plan. Some prefer comprehensive plans with features like financial wellness resources, one-to-one education, onsite educational meetings, regular benchmarking analysis, and hands-on consulting. Others favor a simpler approach, with annual investment committee meetings, virtual employee education, online access to financial education, tri-annual benchmarking reports, and periodic vendor analysis.

Regardless of your preference, the key is to ensure that the costs and value of your plan are aligned. If you have ever used dollar store batteries for your smoke detector, you know that the low price means you need to change them out more often which may be more labor intensive and expensive in the long run. So, it’s not about finding the cheapest offer, but rather about finding a plan that is reasonably priced for the services received.

The Need for Regular Reviews

Regular reviews serve as an early warning system for your plan. They help you track your plan’s investments, fees, features, and benefits. You’ll be able to spot any potential issues early on, much like detecting a low battery signal from your smoke detector.

Here’s a quick guide:

Topic Warning Sign Action
InvestmentsUnderperforming fundReplace fund
FeesBenchmark to peer groupAsk for a fee reduction
PayrollClunky uploads360 integration
ParticipationLess than 90%Re-enrollment
Employee EducationLow contribution ratesImplement a robust education program

Decoding Plan Fees

Plan fees can vary widely. But as a plan fiduciary, what’s crucial is that you’re aware of what you’re paying and that it’s reasonable for the services received.

Fee reasonableness is necessary because ERISA requires plan fiduciaries to act prudently and solely in the interest of the plan’s participants and beneficiaries. This includes ensuring that the fees paid for services are reasonable and the plan receives fair value for those services.

The importance of maintaining a prudent process and regularly benchmarking retirement plans has been underscored by several court cases. For instance, in the case of Sacerdote v. New York University, the court highlighted the necessity for plan fiduciaries to follow a prudent process when selecting and monitoring service providers. Similarly, in the case of Tussey v. ABB Inc., the court ruled that the plan fiduciaries breached their duties by failing to monitor recordkeeping costs and negotiate for rebates from the service provider.

These cases highlight the significance of having a robust process in place to regularly review and benchmark retirement plans, reinforcing the importance of fee reasonableness and the duties of plan fiduciaries under ERISA.

We’re Here to Help

If you need help decoding your retirement plan fees, look for your 408(b)2 document. This document will provide a detailed breakdown of the costs associated with your plan, allowing you to make an informed decision about fees, and we can help you run a benchmarking report to determine if your fees are reasonable for the services provided.

Working Order

Just as we ensure our smoke detectors are in working order, it’s crucial to sit down with an experienced retirement plan consultant to review your company’s retirement plan. Remember, we’re here to help ensure your retirement plan is in top shape.

So, don’t treat your qualified retirement plan like a chirping smoke detector any longer. Give it the attention it deserves. After all, a well-maintained retirement plan is a smooth ride toward a secure future.

PENSION PLAN SPECIALISTS, PC

805 Broadway, Suite 600

Vancouver, WA 98660

360-694-8409

pensionplanspecialists.com

[email protected]

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.

Helping employees in their financial journey can begin by giving them resources on saving best practices.

Savings buckets involves dividing money into separate accounts (buckets) each with a specific purpose. Rather than blindly putting money to the side, this gives employees a more organized system of saving and spending.

PENSION PLAN SPECIALISTS, PC

805 Broadway, Suite 600

Vancouver, WA 98660

360-694-8409

pensionplanspecialists.com

[email protected]

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC.  All rights reserved. Proprietary and confidential.  Do not copy or distribute outside original intent.

Profit sharing is not just a tool to reduce your company’s tax liability; it is also a powerful means of expressing gratitude towards your employees.

As we close the books on last year, employers often find themselves looking for ways to lower their impending tax bills. At the same time, companies are trying to retain and reward top talent. Is there a strategy that accomplishes both? Absolutely, and it’s known as profit sharing. This tax-efficient strategy can serve as a power tool for expressing employee appreciation and has the potential to improve morale, engagement, and loyalty.

The Power of Profit Sharing

When a company makes a profit sharing contribution, it directly reduces its taxable income. This step can result in substantial tax savings, especially for closely-held businesses where the owner is also the largest shareholder such as LLCs, PLLCs, S-Corps, and Sole Proprietors.

Profit sharing is not a one-size-fits-all approach. The amount contributed can vary from year to year, offering flexibility, based on the company’s performance. This means that in profitable years, you can choose to contribute more, while during leaner years, you can reduce the amount.

Aligning Profit Sharing with Company Goals

The vesting schedule of the profit sharing contribution is another critical aspect that aligns with company goals. There are three primary types of vesting schedules: immediate, graded, and cliff vesting.

  1. Immediate vesting means the employee owns the employer contributions right away.
  2. Graded vesting gradually increases the employee’s ownership of employer contributions over a set number of years, such as 20% vesting per year for five years.
  3. Cliff vesting allows the employee to gain complete ownership after a specific period of service, like 0% in year 1 and 2, then 100% after 3 years.

Thoughtfully selecting the vesting schedule should encourage employees to stay with the company longer, reducing turnover, and boosting organizational stability. However, vesting schedules are dictated by your plan document. Consult with your TPA for specifics. Additionally, a retirement plan consultant can be instrumental in these discussions, helping to navigate the complexities of vesting schedules, and align them with your company’s objectives.

What if an Employee Leaves Early?

A common concern is what happens if an employee leaves before they are fully vested. The unvested portion of the employer contributions goes into a forfeiture account. These funds can be recycled to pay for future employer contributions and/or plan expenses, without creating additional tax liabilities for the employer.

This mechanism ensures that your company does not lose out if an employee decides to leave early. Instead, these funds can be utilized to further enhance the retirement benefits of your remaining employees.

Looking Ahead

If your current vesting schedule doesn’t resonate with your company’s goals, it’s worth discussing and potentially revising later in the year. By planning ahead, you can ensure that next year’s profit sharing contributions are structured to optimally meet your company’s objectives and your employees’ needs.

A Winning Combination

Just like the classic combination of peanut butter and jelly, profit sharing contributions present a unique opportunity for companies to lower their tax liabilities while simultaneously expressing appreciation for their employees. It serves as a reminder that when the company succeeds, everyone shares in the success. This powerful message can significantly contribute to building a loyal, engaged, and motivated workforce.

As a plan fiduciary, your actions can profoundly impact your employees’ financial futures. By exploring and implementing strategies like profit sharing, you can play a pivotal role in boosting their retirement readiness while simultaneously working toward your company’s financial and strategic goals. A retirement plan consultant can provide valuable guidance on profit sharing strategies.

PENSION PLAN SPECIALISTS, PC

805 Broadway, Suite 600

Vancouver, WA 98660

360-694-8409

pensionplanspecialists.com

[email protected]

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.

Discover top strategies for maintaining organized fiduciary files with best practices for compliance and peace of mind.

As a plan sponsor, one of your primary responsibilities is ensuring that your company’s retirement plan operates smoothly and within the boundaries of compliance regulations. This is no small feat, especially when dealing with the complexities of a qualified plan. One of the ways to help enable hassle-free management is by maintaining neat and tidy records. This article will provide you with some practical tips and best practices on how to organize and document your fiduciary files.

Why Is Retirement Plan Documentation Important?

First, let’s delve into why retirement plan documentation is crucial. Proper documentation serves as evidence of your diligent fiduciary oversight. It helps to show that you are actively managing your company’s retirement plan in accordance with ERISA regulations. Moreover, it helps streamline the auditing process and makes it easier to answer inquiries from your team here at Pension Plan Specialists).

Best Practices for Organizing Fiduciary Files

Now, let’s explore some of the best methods to keep your fiduciary files in order:

1. Create a Fiduciary File System: Designate a secure location, preferably a locked file cabinet or encrypted digital storage space, for all plan-related documents. As a client of Pension Plan Specialists, you have access to our Plan Sponsor Link (PSL) where we provide a secure library for all your fiduciary documents. This includes the plan document, amendments, participant communications, government filings, and investment reviews.

Action item: Login to the Plan Sponsor Link and familiarize yourself with the features and benefits of using this free resource. If you decide to use a different resource, here are some steps to take. Create a new master folder and label it “Retirement Plan”. Within this master folder, create subfolders with important categories such as, “Plan Document and Amendments”, “Participant Communications”, “Annual Filings”, and “Investment Reviews”. Ensure that relevant documents are correctly placed within their corresponding subfolders.

2. Implement a Document Retention Policy: Develop a policy that outlines for how long different types of documents should be retained. For instance, the plan document and amendments should be kept permanently, while records related to plan operations should typically be kept for at least six years.

3. Regularly Update Your Files: Make it a habit to update your files regularly. This includes adding new documents as they come in and removing outdated ones based on your retention policy.

4. Use Clear Labeling and Categorization: Clearly label each document with its type and the date it was created or received. Categorize documents based on their nature, such as plan administration, investment management, participant records, and compliance tests.

Folder / File Name Examples

  • Plan Document and Amendments / Plan Document-ABC Company-Retirement Plan-2010.docx
  • Investment Reviews / Investment Review-ABC Company-Retirement Plan-Q1 2024.docx
  • Participant Communications / Participant Education-ABC Company-Retirement Plan-Q1 2024.docx

5. Ensure Accessibility While Maintaining Confidentiality: Balancing accessibility with confidentiality is vital when managing fiduciary files. The documents should be readily retrievable as needed, yet stored in a manner that protects sensitive data from unauthorized access. Implement safeguards such as password protection for sensitive documents and restrict access to authorized personnel only.

Let’s take the company’s census file as an example. This file holds sensitive information like Social Security numbers, dates of birth, salaries, 401(k) deferral amounts, employer match, and profit sharing calculations. This file should be safeguarded with a password and is only accessible to employees who require this information for their roles. For instance, a newly hired temporary employee would not have access to this file, ensuring the information remains confidential.

Reduce the Hassle of Compliance Testing

One of the many benefits of maintaining organized fiduciary files is how much easier it makes compliance testing. For example, your Relationship Manager here at PPS, will ask you to upload your data by January 31st to run our compliance tests for the year.

By having clean data and organized files, this task becomes significantly less daunting. Instead of spending hours searching for and compiling the requested information, you can access it within a few clicks. This not only saves you valuable time, but it also helps ensure that PPS has all the necessary information to perform accurate compliance tests.

Structure for Success

Maintaining a well-organized retirement plan is more than just a tidy system of records. It’s an outward sign of effective fiduciary oversight, accurate audits, and comprehensive compliance testing. As a plan sponsor, you play an important role in the smooth operation of your company’s retirement plan.

However, you don’t have to navigate this path alone. Partnering with an experienced retirement plan consultant like your team here at PPS can offer valuable assistance, provide answers to your questions, and help ensure you’re on the right track. Remember, the success of your retirement plan is not just about its performance but also about its organization and compliance. We are here to provide guidance, help you stay organized, and support the development of a bright financial future for your employees.

PENSION PLAN SPECIALISTS, PC

805 Broadway, Suite 600

Vancouver, WA 98660

360-694-8409

pensionplanspecialists.com

[email protected]

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.

Stay ahead of deadlines with help from our annual Compliance Calendar. If you have any questions about deadlines or the information requested, please contact us to review today!

PENSION PLAN SPECIALISTS, PC

805 Broadway, Suite 600

Vancouver, WA 98660

360-694-8409

pensionplanspecialists.com

[email protected]

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.