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Attract and retain top talent with a well-designed retirement plan. Explore key features, investment options, and executive-level benefits to keep employees satisfied long-term.
Designing a Retirement Plan for Your Business to Help Attract and Retain Top Talent
A well-designed retirement plan can be a valuable tool for attracting and retaining top talent. Employees today are looking for more than just a competitive salary—they want benefits that support their long-term financial well-being. Offering a retirement plan with thoughtful features may set a company apart in a competitive job market and encourage employees to stay for the long term.
Plan Design Features That Can Support Retention
The structure of a retirement plan can influence employee participation and retention. Certain features may make a plan more appealing and accessible while also supporting long-term savings.
Immediate or Short Vesting Schedules
Shorter vesting schedules give employees quicker access to employer contributions, which may encourage them to stay with the company. This can be especially useful in industries where turnover is high.
Safe Harbor Provisions
Safe harbor plans allow highly compensated employees to contribute the maximum amount to their retirement accounts without restrictions. This structure may be appealing to business owners and key executives who want to increase their own retirement savings while offering competitive benefits to employees.
Roth 401(k) and Tax Diversification Options
Offering both traditional pre-tax and Roth after-tax contributions allows employees to choose a tax strategy that aligns with their financial goals. Some may prefer the immediate tax deduction of a traditional 401(k), while others may find long-term tax-free withdrawals from a Roth 401(k) more beneficial.
After-Tax Contributions & In-Plan Roth Conversions
For employees who want to contribute beyond traditional limits, after-tax contributions with the ability to convert funds to a Roth account can be an additional savings option. This feature is often valued by higher earners looking for tax diversification strategies.
Generous Employer Matching Formulas
Employers that offer competitive matching contributions may see higher participation rates and stronger retention. A structured matching formula—such as a dollar-for-dollar match up to a certain percentage—can encourage employees to contribute more toward their retirement.
Profit-Sharing Components
A profit-sharing feature allows businesses to make discretionary contributions based on company performance. This structure can create a stronger connection between employees and the company’s success, fostering long-term engagement.
Investment Options That Appeal to a Diverse Workforce
Employees have different levels of investment knowledge, risk tolerance, and long-term financial goals. A well-rounded retirement plan may include a range of investment options to accommodate these varying needs.
Additional Benefits That Can Strengthen Retirement Plans
Beyond traditional retirement contributions, employers can offer additional financial wellness benefits that help employees plan for their future.
- Student Loan Repayment Matching Programs – Some retirement plans allow employers to make 401(k) contributions on behalf of employees who are making student loan payments.
- Financial Wellness & Education Programs – Providing financial literacy resources, workshops, and coaching sessions can help employees feel more confident in managing their money.
- One-on-One Financial Advisory Services – Individual consultations can provide tailored advice on contribution strategies, investment choices, and long-term planning.
- Mobile App & Digital Tools – Today’s retirement plans often include digital platforms that allow employees to monitor their savings, adjust contributions, and track investment performance from their phones or computers.
- Auto-Enrollment & Auto-Escalation – Auto-enrollment increases participation by enrolling employees in the retirement plan by default, while auto-escalation gradually increases contributions over time.
Retirement Plan Enhancements for Executive-Level Talent
Retirement planning needs can vary based on an employee’s career stage and income level. Executives and key employees may seek additional savings options beyond traditional 401(k) plans.
Non-Qualified Deferred Compensation (NQDC) Plans
These plans allow high earners to defer a portion of their salary and bonuses, potentially reducing taxable income in the current year. The deferred compensation is typically paid out in future years, often during retirement, when the executive may be in a lower tax bracket.
Supplemental Executive Retirement Plans (SERPs)
SERPs provide additional retirement benefits to select employees, often serving as a retention tool for key leadership positions. These employer-funded plans are typically designed to supplement other retirement savings and may be subject to specific vesting schedules.
Cash Balance Plans
Cash balance plans combine elements of traditional pensions and defined contribution plans, offering predictable, employer-funded retirement benefits. These plans may appeal to high-income employees who are looking for additional tax-advantaged savings beyond what a standard 401(k) allows.
Executive Carve-Out Options
Businesses may create specialized retirement benefits exclusively for senior executives or key employees based on tenure, leadership level, or contribution to company success. These options can include enhanced matching contributions, additional profit-sharing, or other customized financial incentives.
Making Retirement Benefits Easy to Use
A well-administered plan can enhance the employee experience and make it easier for businesses to manage retirement benefits. Clear processes and communication can reduce confusion and encourage participation.
- Low Participant Fees – Keeping costs low can help employees retain more of their savings over time.
- Clear Communication & Education – Employees should have access to straightforward information about plan features, contribution options, and investment choices.
- Streamlined Rollover Processes – Simplifying the rollover process can make it easier for new hires to transfer existing retirement savings into the company’s plan.
- Quick Loan Processing When Needed – While borrowing from a retirement account isn’t ideal, some employees may value the flexibility of a streamlined loan process in case of financial emergencies.
- Regular Plan Reviews & Benchmarking – Employers can periodically assess their plan’s competitiveness and make adjustments as needed.
By offering a mix of competitive plan design features, diverse investment options, financial wellness benefits, and executive-level enhancements, businesses may strengthen their ability to attract and retain top talent. Communicating these benefits clearly and providing ongoing education can help employees make the most of their retirement savings opportunities.
For more insights into structuring benefits that align with your company’s goals, contact a business planning advisor at EP Wealth.
DISCLOSURES
- Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.
- Hiring a qualified advisor and/or financial planner does not guarantee investment success and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any direct or implied results or projections being represented here will be met or sustained.
- The need for a financial advisor or financial planner and/or the type of services required are specific to the uniqueness of each individual’s circumstances. There is no guarantee or warrantee that the services offered by EP Wealth Advisors, LLC will satisfy your specific financial services requirements. Services offered by other advisors may align more to your specific needs.
- EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability
- Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
- The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisors. Before making any decision or taking any action, you should consult with a professional tax advisor who has been provided with all pertinent facts relevant to your situation. EP Wealth Advisors is not in the business of providing legal or tax advice. Please consult with a CPA, tax professional, and/or attorney regarding your specific situation.
