How do we best communicate plan options?

Employer Match. Free money in the 401(k). Something to make the most of – by participants. And in many instances, a cost effective way for companies to encourage participation in the retirement plan.

Despite that, unless communicated effectively, participants have a difficult time understanding the dollar amount of the match that they could receive.

In addition to the examples mentioned in the article by SHRM, a widely encountered communication challenge has to do with explaining why employer contributions are less than what they should be when the employee contributions reach the 402(g) limit in the early part of the year, and have to be stopped mid way through the year. Many plans tend to true-up those employer match contributions as part of the year-end processing, or earlier if the participant leaves the company under the provisions of the plan document.

Try explaining to a participant why they did not receive the maximum match they are entitled to, until the end of the year – without their own scenario!

Making sense of timing the employee contributions to maximize match, using the plan formulas, is just one of the communication challenges.

What are some of the other communication challenges that you, as a participant in savings plans, would you like your company to address? What is your preferred mode of getting that communication – paper or electronic? And if electronic, how – CD, DVD, email, social media, or some other alternative?

Feel free to share your thoughts – as always!

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