In recent years, many employees have been faced with financial hardships, such as job loss or unexpected expenses, which have led to them pulling cash from their 401(k)s. This can be detrimental to their long-term retirement savings and can leave them without a safety net during difficult times. Employers can help to mitigate this by repurposing their benefit plans to better meet the needs of their employees.
One way to repurpose benefit plans is to offer more flexibility in how employees can access their funds. For example, employers can allow employees to take loans or hardship withdrawals from their 401(k)s without penalty. This can provide employees with access to funds they need in a crisis without having to completely withdraw their savings. Additionally, employers can also offer financial wellness programs that provide employees with financial education and resources to help them manage their money more effectively.
Another way to repurpose benefit plans is to offer more comprehensive benefits packages. Many employees are looking for benefits that can help them manage unexpected expenses, such as health care costs or child care expenses. Employers can provide these benefits by offering flexible spending accounts (FSAs) or dependent care FSAs, which allow employees to set aside pre-tax dollars for these expenses. Additionally, employers can also offer benefits such as health savings accounts (HSAs) or health reimbursement arrangements (HRAs) that can help employees pay for out-of-pocket medical expenses.
Another way to repurpose benefit plans is to offer more options for retirement savings. Many employees are not saving enough for retirement, and employers can help by offering multiple savings options, such as a 401(k) plan, a Roth 401(k) plan, or a cash balance plan. Additionally, employers can also offer automatic enrollment and automatic escalation features, which can help employees save more for retirement without having to think about it.
Lastly, employers can also repurpose benefit plans by offering more options for employee engagement and communication. Many employees are not aware of the benefits available to them or do not understand how to use them. Employers can help by offering employee benefits fairs, benefits enrollment portals, and other communication channels to help employees learn more about their benefits and how to use them.
Repurposing benefit plans can help employers to better meet the needs of their employees and reduce the number of employees who are pulling cash from their 401(k)s. Employers can offer more flexibility in how employees can access their funds, offer more comprehensive benefits packages, offer more options for retirement savings, and offer more options for employee engagement and communication. By providing employees with the resources they need to manage their finances effectively, employers can help to improve their employees' financial well-being and reduce the risk of employees depleting their retirement savings.