Overview: The days of guaranteed employer-provided pension and health insurance are long gone. These days, employees are primarily responsible for ensuring they can retire comfortably. This is not always easy, since many employees start saving too little too late.
Even though the rules of the game have changed, employers can still serve as a valuable resource to employees when it comes to retirement planning. Employers can be proactive in their efforts to educate employees on the importance of saving for the future; encourage employees to contribute to a retirement plan; explain how investment strategies change based on factors such as age, the number of years left to retirement and individual goals; ensure employees fully understand their retirement plan's periodic benefit statements and other materials available to them including the plan's Summary Plan Description (SPD); and encourage employees to research retirement planning options on their own or with a financial planner.
Employees that receive education and support from their employer have a better understanding of what they need to do in order to prepare for retirement.
Trends: Employers continue to be creative in their efforts to educate employees on the importance of saving for retirement and retirement planning in general. More than likely, auto-enrollment and escalation features will become more prevalent as a means to help employees invest for their future.
Author: Tracy Morley, SPHR, Legal Editor
Updated to reflect IRS guidance issued on the expanded determination letter program.
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Updated to include a forthcoming provision regarding the DOL final rule on association retirement plans.
XpertHR has made it easier to find key Employee Benefits resources by splitting the Employment Law Manual section formerly named Legally Required Benefits into two sections.
This section helps HR professionals understand obligations related to Social Security and Medicare.
Updated to reflect inflation-adjustments to health savings account contribution limits for 2020.
Updated to reflect the increase in the Social Security taxable wage base, effective January 1, 2019.
Updated to reflect the 2019 FICA tax rates and benefit amounts.
President Trump has signed an Executive Order instructing the Department of Labor (DOL) and the Treasury Department to consider regulations to make it easier for small businesses to offer retirement savings plans.