Five Plan Design Ideas You Can Implement Now to Kickstart Your Company’s Retirement Plan in 2020

With the end of the year upon us, many plan sponsors are taking the time to evaluate their 401(k) and retirement plan offerings and investigate ways their plans might be more competitive and effective. New plan features have the potential to revitalize a workforce, make employers more attractive to top-tier talent, and increase the likelihood of employee retirement readiness. Here are five plan design ideas you can implement now to kickstart your retirement plan in 2020.

1- Consider Automated Features                         

Automated features like auto-enrollment and auto-escalation have been linked statistically with greater plan participation. According to a 2018 T. Rowe Price reference point benchmarking study, the average participation rate of plans with auto-enrollment is 96% higher than those without, with participation rates reaching 85.6% in auto-enrollment plans compared to only 43.7% in plans lacking auto-enrollment features.

Additionally, implementing automatic escalation features can increase the likelihood employees will reach their goals for retirement readiness, as many tend to keep automated features rather than act to opt out of them. A 2017 Financial Wellness Survey by the Principal Financial Group found that over 80% of participants retain the escalation feature when it’s automatically built into the plan design.

2- Evaluate Your Thresholds

If your plan already utilizes automatic features, take a fresh look at the thresholds you have in place for the default rate and escalation caps. The same 2018 T. Rowe Price reference point benchmarking study points out that when automatic features were first introduced, many plan sponsors set a default participation rate of 3%, however over 37% of sponsors now have an initial default rate of at least double that, starting at no less than 6%. The maximum threshold for auto-escalations has experienced a similar upwards trend.

As in the case of automatic features, higher thresholds are a plan design feature you can implement now to jumpstart your plan offerings in 2020, leading to a potential increase in participation, deferral rates and financial readiness for retirement. 

3- Rethink Vesting

Many plan sponsors today opt to assign a schedule to the vesting of employer contributions, vesting them in percentages as employees accrue tenure. However, plan forfeitures are not truly refundable, and immediate vesting of all contributions has the potential to attract and engage new hires. When the pros and cons are weighed, organizations may find that it is more beneficial to choose immediate vesting as a draw for top talent.

4- Investigate Immediate Eligibility

While it’s common for companies to require a year of service before allowing employee contributions and rollovers, the opportunity to participate in plan savings is increasingly requested by employees. At the executive level, this plan design feature is often seen as a key benefit, making its inclusion a possible differentiator for organizations that choose to implement it.

5- Support Total Financial Wellness

Another area seeing increased demand from employees is access to financial wellness tools and education. In response, many 401(k) recordkeepers now offer educational opportunities and online tools to help participants understand and improve their overall financial health. Working with your plan provider to ensure access to total financial wellness tools can mean a more educated and engaged workforce and can be an attraction for new hires.


These are just five of the many creative plan design ideas you can consider boosting the value of your company’s retirement plan in the new year. Contact N1 Advisors to discuss how these or other plan design changes might benefit your employees as they work towards financial readiness for retirement.