Financial Planning Month: What Can Plan Sponsors Do to Promote Financial Wellness Among Participants?
As the US workforce becomes more mobile, the volume of retirement accounts left behind is expected to increase. The Government Accountability Office (GAO) estimated that between 2005 and 2015, 25 million participants in workplace retirement plans left a qualified plan account behind with a former employer, and millions more left more than one account behind. This can lead to issues for both plan sponsors and participants, which is why it is important to take proactive measures to help promote financial wellness before an employee leaves the company or is terminated.
For plan sponsors, those accounts belonging to former employees can create issues with plan and audit costs, liability related to former employees and the administrative effort required to locate them. For the participant, leaving an account behind means they are no longer able to add to their retirement savings, and they are left with a limited menu of investment options offered in the plan.
There are a few steps you can take to ensure your participants stay connected with their investments.
- Consider updating your plan to include auto-portability to keep retirement savings intact.
- Make sure that your participants’ addresses are always up-to-date.
- Discuss retirement account options with participants when they leave the firm.
Other considerations to help promote retirement readiness:
- Discuss auto-enrollment and re-enrollment as a way to encourage employees to save for retirement.
- Perform a retirement checkup for employees who are approaching age 55 and nearing retirement.
At Millennium Trust, we offer a robust suite of services to help you better service retirement plan participants. We are committed to ensuring that retirement readiness is attainable and affordable at all levels of the retirement industry and that every American benefits from the money they’ve earned.
Click below to learn more about promoting retirement readiness among your participants, and be sure to check out the other blog posts in the Financial Planning Month series.
The material in this blog is presented for informational purposes only. Millennium Trust Company performs the duties of a directed custodian, and as such does not sell investments or provide investment, legal or tax advice.