Sometimes Plan Sponsors wonder if the time, effort, and cost to maintain their company 401(k) Plan is really worth it. If participation is low and no employees are asking questions about the Plan you may wonder, “Should I continue offering the Plan”?
A recent survey by AARP of 1,000 individuals ages 25 and older about their retirement savings uncovered some interesting findings. Note that this survey was conducted after the pandemic caused lockdowns in many areas and job loss throughout the country.
The survey found that:
- Six in ten individuals are anxious about having enough money saved for retirement to live comfortably. Only three in ten believe they will have saved enough money to be able to retire.
- Of those aged 45 and older that have not yet retired, eight in ten wished they had saved more.
- Two-thirds of those interviewed indicated they are participating in a workplace retirement plan. They all stated that this is a valued benefit and is helping them to save for retirement.
- Ninety percent of those interviewed stated that legislation should be passed that makes it easier for everyone to save money out of their paychecks for retirement.
Provisions that were noted as important in a retirement plan included:
- Portability – allowing employees to take the account with them if they changed employers.
- Inclusion – it was important that all employees be allowed to participate – especially those working for small employers.
- Payroll deduction was noted as very important. Even younger workers understand that if they have to take any action to save it will be more difficult than if the employer withholds it directly from their pay.
- Voluntary program - they also believe having a voluntary program is important as not everyone will want to participate or be able financially to participate.
While these survey results may not, overall, be surprising, they do support the importance of a retirement savings plan as a key benefit to attract and retain workers. The next time you are considering whether the administrative effort for your 401(k) Plan is worth it, remember these results. Make sure you fully discuss the benefits of the Plan with all your employees before you take away a benefit that is important to their future.
At Summit CPA we specialize in retirement plan audits. If you would like to discuss our audit process in more detail or need an audit contact our office at (866) 497-9761 to schedule an appointment. We can help you navigate the world of the 401(k) audit as proficiently as possible. We also offer off-site assistance and flat-fee pricing so there are no surprises when the job is complete.