401(k)s – enrolling easy as 1-2-3

Two facts about retirement plans: (1) your plan is only beneficial if employees participate and (2) inertia is one of the biggest challenges to getting employees enrolled.

“For people who are strapped for time or unsure about the enrollment process, Enroll123 offers a simple strategy to get them started.”
-Kathleen Endres, Executive Vice President, Client Services at Ascensus

The challenge: Building participation

Building participation is essential to the success of your company’s retirement plan. If employees are not contributing to the plan, they are in danger of being unprepared for retirement. At the same time, their failure to participate may make it harder for your plan to pass required compliance tests. Consequently, you could find yourself in the difficult position of:
•    having to reduce contribution and deferral amounts for highly compensated employees or
•    having to issue corrective distributions to bring the plan back into compliance.

Getting more employees involved in your retirement plan can resolve these issues.

Meaningful contributions are essential to retirement security

1. Hypothetical results are for illustrative purposes only and are not meant to represent the past or future performance of any specific investment vehicle. Investment return and principal value will fluctuate and when redeemed the investments may be worth more or less than their original cost.

If you make pre-tax [traditional 401(k)] contributions, taxes are due upon withdrawal. You may be subject to a tax penalty if you take a withdrawal from the plan prior to reaching age 59½. Investment earnings are compounded annually.

The solution: Enroll123

To make the enrollment process as simple as possible, Ascensus, a leading provider of retirement plan solutions, launched Enroll123™.

Enroll123™ is a free, personalized mailer designed to make enrolling in a plan easy so more employees take an active role in saving for their retirement years. The one-page communication targets eligible, non-contributing employees and enables them to enroll by:

(1) reviewing illustrations and deferral options based on their actual salary and census data;
(2) checking a box and selecting a deferral rate; and
(3) returning the signed, self-sealing mailer to Ascensus using prepaid business reply postage.

And to ensure the employee can respond in the way he or she is most comfortable, the mailer also includes contact information for enrolling online or through an interactive voice response phone system.

The results of our recently completed pilot program were quite promising. Respondents set their average salary deferral rates at 7%, often exceeding their employer match. In addition, many plans experienced double-digit response rates, including one plan with 30% of recipients electing to enroll.

More ways to engage employees

Enroll123™ is simply the latest addition to Ascensus’ successful Targeted Communications program. Ascensus offers a range of customized and easy-to-understand communication pieces with messaging designed to reach employees not taking full advantage of their company retirement plan.

1)      Like Enroll123, Enrollment Communication targets eligible employees who are not currently participating in the plan and encourages them to become participants. Employees are shown the amount they will likely need to retire along with the steps they need to take to get started.
2)      Through Increase Contribution Communication participants are shown how boosting their contribution amounts to the level of the employer’s maximum match can positively impact their account balances when they reach retirement.
3)      Gap Analysis Communication can be leveraged to reach employees that are enrolled and/or contributing up to the employer match but still have a projected savings shortfall. Through personalized illustrations, the employee is shown the additional amount they will need to save to maintain their current lifestyle at retirement.

Leveraging Enroll123™ or any of the other three targeted communications can assist you in building employee awareness about the importance of contributing meaningfully to your company plan. When the desired end result of increased employee participation is achieved, you will not only benefit from the alleviated administrative hassles, but from knowing you have helped your employees prepare for their futures.

To learn more, go to www.ascensus.com or call 800-345-6363.