401K: Questions Your Employees Are Too Embarrassed To Ask
In any organization, clear communication is a vital ingredient for a productive atmosphere and satisfied employees. This is especially the case when it comes to any information that affects the financial well-being of people in the company, such as employee 401k plans.
But unless you’ve held a clear workshop that explains everything they need to know about 401k plans in great detail, there’s a good chance many employees could use more information. Here are some of the most important questions they likely have but are too embarrassed to come forward and ask:
What is a 401k plan?
This might come as a surprise, but many working Americans don’t even know what a 401k plan is. Consider creating and sharing key documentation in clear and simple language that explains everything about the system that affects them. As a refresher, a 401k is a workplace savings plan that gives employees the opportunity to place some of their paycheck into a dedicated account, with that money only being taxed when it is eventually withdrawn. It’s named “401k” after the internal revenue code that led to its creation and implementation.
Do we have a 401k plan and, if so, how can I enroll?
Assuming you have a 401k plan in place for your employees, make sure they are aware of when and how they can take part. Whether employees can enroll when they start, have to wait a year, or are enrolled automatically should all be clearly communicated during their workplace orientation phase. Outline a clear process that employees can take to enroll, with the necessary time frames and limits to the maximum that can be saved.
How can I track my funds?
It’s important to give employees a quick and easy way to track their 401k accounts. This can either be through an online portal and digital statement or through a dedicated financial planning tool. If employees are able to securely check and track their 401ks on their own, it will save you valuable time dealing with manual inquiries on an individual basis.
When can I withdraw my money?
If your company’s 401k plan is fairly standard, make sure your employees know that they can start making penalty-free withdrawals from their 401k accounts from the age of 59 and a half, with any previous withdrawals incurring additional fees. For many Americans, their 401k accounts aren’t only a vehicle for retirement savings—they also serve as a quick source of funds in the case of an emergency. If this is the case for you, make sure the specific situational requirements for this are clearly communicated in writing.
If you don’t want to put your employees in a situation where they have to choose between emergency finance and a comfortable retirement, consider implementing a voluntary employee benefits service like TrueConnect. Since many employees don’t have a sufficient emergency fund, by extending a hand and offering helpful financial services in the way of a bank regulated loan that doesn’t affect their credit score, you can do your part to protect your most valuable assets. TrueConnect is a voluntary employee benefits plan that offers an easy, quick, and effective way to help employees with their personal finances at no cost to the company. This is not meant to replace your existing benefits, but as an added value, voluntary benefits service. Get in touch to learn more about TrueConnect’s simple and effective solution that can help prevent employees from having to take a premature withdrawal from their 401k. Contact us today for a confidential, complimentary consultation regarding our voluntary employee benefits program.