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Win the war for talent by enhancing your retirement plan

Matt Lemay

Business owners across all industries are faced with one of the most challenging environments in recent memory. According to a recent Conference Board survey of CEOs called Reset and Reimagine1, three of the top concerns for business leaders include rising interest rates, supply chain disruptions and the ability to maintain sufficient staffing levels. While the first two concerns are uncontrollable, enhancing your company’s retirement plan is controllable and may be the difference between winning or losing the war for talent amid the Great Resignation.

Here's how your retirement plan can give your company an edge in recruiting and retaining employees.

Benchmark your plan design

In a labor market that favors job seekers, understanding how your 401(k) plan stacks up against competitors can be very useful. Benchmarking your plan design against similar-size companies in your industry is the first step in creating a competitive 401(k) plan for your company. Knowing what your competition is offering will allow you to adjust accordingly and give your business the edge in the competition for employees.

Businesses can differentiate their 401(k) plans by providing a more generous matching formula, offering immediate eligibility for participation in the plan and using a shorter vesting schedule. According to a 2021 report from Vanguard, “How America Saves,” nearly half of all plans immediately vested matching contributions from participating employers, while 25% of plans with employer matching contributions used a five- or six-year graded vesting schedule. A recent study showed that more than 45% of respondents considered an employer 401(k) match to be a major factor when deciding whether to accept a job.2

Include a profit-sharing plan

A great way to incentivize and reward employees is by offering a profit-sharing plan. This type of retirement plan can be set up on a discretionary basis. In good years, your employees will have the opportunity to share in the success of the business. In lean years, the business can have the flexibility to make minimal contributions, if any at all. Profit-sharing plans can also be designed to potentially incorporate an age-weighted formula, allowing owners and other key stakeholders to receive a larger portion of the profit-sharing contribution.

Add a cash-balance plan

If maximizing contributions and tax deductions is important, adding a cash-balance plan to your 401(k) offering could provide an advantage over your competitors. Cash-balance plans are a type of defined-benefit plan, sometimes referred to as hybrid retirement plans, in which the company makes contributions on behalf of all participants. What sets these plans apart is that they offer much higher contribution limits than a 401(k) plan, especially for older participants who can contribute over $200,000 after age 55. They also provide a guaranteed retirement benefit. A participant’s contributions grow tax deferred at a set interest rate, typically 4% to 5%, rather than based on investment performance. This type of plan is well suited for small businesses with higher earners, such as professional service organizations or closely held businesses. Cash-balance plans have mandatory annual funding requirements and substantial administrative fees.

Attract top talent by offering a non-qualified plan

Offering a non-qualified tax deferred compensation (NQDC) plan can be used as a recruitment and retention tool for key executives and select senior managers. A NQDC plan is an employer-sponsored, tax-deferred retirement savings plan that falls outside the Employment Retirement Income Security Act (ERISA). Non-qualified plans are exempt from the regulations and testing that apply to qualified plans. These plans are designed to satisfy the retirement needs of key executives and other highly compensated employees, providing benefits well beyond those available in a qualified plan. Furthermore, offering a NQDC plan broadens your company’s compensation package and can be included as part of the employment contract negotiation.

Provide access to financial wellness programs

According to an Employees Benefits Research Institute survey, over two-thirds of workers feel stressed thinking about their financial futures, while 70% said they need their employer’s help to become financially healthy and secure. A survey done by John Hancock shows that 49% of Americans worry about not having enough retirement savings. This also has an impact on employers. According to the Society for Human Resource Management, financial stress results in a 34% increase in absenteeism and tardiness. Employees who worry about money miss almost twice as many days per year compared to their unstressed colleagues. Employers should account for the potential toll financial stress can have on their employees’ productivity and overall well-being.

How can you, as an employer, help your employees reduce financial stress? Including a financial wellness program can provide another arrow in your employee benefit quiver. A recent PwC survey found that 38% of employees who are stressed about finances are looking for a new job. The survey also reported that 76% of employees stressed about money are attracted to companies that care more about their financial well-being. Examples of financial wellness programs include financial literacy education, debt counseling and financial coaching. These benefits can go a long way in helping to reduce the stress of your employees.

Offer additional benefits

Some plan sponsors are adding other non-retirement plan related benefits such as emergency savings accounts (ESAs) and/or health savings accounts (HSAs). According to research done by PwC, 38% of workers have less than $1,000 in savings to deal with emergencies.3 An ESA can be funded through automatic deposits set up through payroll deductions, similar to how employees fund their 401(k) plans. The money deducted into an ESA is taxed as income and is available to employees who have immediate financial needs. HSAs allow employees to set aside money on a pre-tax basis to pay for qualified medical expenses. There is no use-it-or-lose-it requirement like ESAs, and any funds that remain in the account continue to grow and accrue interest until they are needed. HSAs can be an effective and tax-efficient way to save for healthcare costs in retirement.

Talk with an expert

These are just some of the ways employers can help recruit and retain the high-quality employees that their companies depend upon. If you’re an employer looking to add more retirement and financial benefits to help your employees succeed, talk with an expert. In this competitive labor market, employers need to find ways to stand out. Having a robust retirement plan can help make your offer more attractive. An experienced retirement program expert can help walk you through which options are best for your organization based on the number of employees, as well as your locations and resources.


"Reset and Reimagined - 2022 C Suite Survey." Source: Conference Board.


"Firms beef up retirement benefits." Source: Pension and Investments, Principal Financial Group


"2022 Employee Financial Wellness Report." Source: PWC

Matt Lemay

About Matt Lemay

Matt Lemay has the expertise to create a retirement plan solution that meets your unique goals. He provides disciplined, high-quality investment management, customized participant education and training, and client-specific plan review and consultation for businesses seeking to optimize their retirement plans. By building long-term client relationships based on prudence, responsibility and trust, he helps individuals and organizations establish and meet their retirement benefit goals. Matt earned a bachelor’s degree in business from Bethel University in St. Paul, Minnesota. Matt is involved with Eagle Brook Church in White Bear Lake, Minneso...

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