Human Interest - The 401(k) provider for small and medium-sized businesses

How to Ask Your Manager or Boss About a 401(k) for Your Company

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If you’re an employee working in a small to medium-size business, you may look at your peers in larger corporations with envy when it comes to all the benefits and perks their employers provide. It’s true—those organizations are in a better position to offer appealing benefits, given their larger budgets. However, smaller businesses—thanks to their size and ability to be nimble—can also provide great benefits that really suit their employees. Maybe your company doesn’t currently offer a 401(k) plan at all, or they do, but there’s no match — here are some concrete steps to encourage your employer to administer benefits programs that meet your needs as an employee, while also helping them meet their business goals. We’ll focus mainly on how to ask for a new 401(k), but many of the recommended steps also apply to asking for a match or a better 401(k) provider. Skip to the last section if that’s what you’re most interested in.

Check in with your co-workers

Are you the only one in your company who wants a 401(k)? If so, your chances aren’t great. Make sure other employees understand the benefits of a 401(k) and that they’d be on board with you asking about it as a new offering. It’s much more convincing to be able to say, “5 out of 6 people on our sales team say they’d definitely contribute to a 401(k)” or “our head of marketing mentioned that it’s been difficult to hire without a 401(k)” as opposed to “I wish our company had a 401(k)”. Need help convincing your co-workers? Here’s some recommended reading to pass along to them:

Talk to the right person

It’s probably best to start the discussion about a 401(k) plan or a 401(k) employer match with your direct manager. They may have insight about upcoming changes to benefits plans that you may not be aware of, and they are the ones who represent employee interests to the company owner or senior leadership. If they’re also involved in hiring in any way, you may also want to ask them how a lack of a 401(k) affects the effectiveness of their recruiting. If your manager doesn’t respond or isn’t willing to bring your ideas to leadership meetings, make time to connect with the HR manager in your company, the person who handles the administrative side of the business (COO, general manager, or accountant), or the business owner (CEO or founder), preferably in that order. Make sure to work your way up and not jump right away to the business owner, as to not take anyone by surprise or put anyone in an awkward position.

Express your gratitude

When you broach the topic of offering a 401(k) or adding an employer match as part of the benefit, start out on a positive note: express your gratitude for the benefits that are already in place. Offer some personal insight as to how the healthcare coverage, transportation program, or childcare subsidy has helped improve your experience as an employee. From the standpoint of an employer, benefits plans have an impact on the bottom line, both in terms of employee retention and hiring new employees. If you’re talking with your company founder, manager, or another representative, they want to know that their effort to deliver positive programs for employees hasn’t gone unnoticed.

Provide data

If you want your request to be taken seriously, do your research. Don’t show up at a meeting or start a conversation about adding a 401(k) plan or increasing the employer match without having some data to back you up. What kind of data should you gather?

Offer to help

If your manager or leadership team expresses interest in your idea about a 401(k) plan or the suggestion to add an employer match, offer to research what options exist: At slightly larger companies, there’s often a 401(k) or employee benefits committee that does vendor research and regularly re-evaluates the offerings on behalf of all employees at the company so that these decisions aren’t made just by HR without any input from employees. You’ll want to look for a 401(k) provider that makes administration easy and affordable for small to medium-size businesses. As this investment review site explains, it’s also important to find a company like Human Interest that is transparent about their fee structure.

The financial benefits of a(n increased) 401(k) match

If your company already has a 401(k), and your request is that they also offer a match or increase the current match, start by reading this article and pass it along to your HR manager: Small Business 401(k) Match: Why It’s Worth It. It explains that the key benefit of a good 401(k) match is the tax savings. Both employers and employees receive tax benefits with a matched 401(k) plan. Employees can save for retirement tax-free, and the money a company contributes to employees’ 401(k) plans is tax deductible, which provides an ongoing tax benefit to employers. Other benefits include easier compliances testing, which the article explains as well. How does this compare to a bonus or a raise? With a typical bonus or raise, employees pay income and employment taxes on money they receive. And employers pay Social Security, Medicare, unemployment and other significant payroll taxes when they offer an employee a raise or a bonus. If you and your employer do the math, you’ll see that the money in a match can have more financial impact than a one-time bonus or salary increase. As part of your discussion, share information with decision makers about baseline numbers when it comes to the most common 401(k) employer match contributions. According to Benchmark Your 401(k) Plan, the average company contributions are as follows: Finally, kudos to you for initiating these discussions—planning and saving for your retirement is something to start doing sooner rather than later. Yes, business owners are focused on moving the business forward, but part of that equation includes satisfying employees and incenting them to deliver results. It’s your job to help them understand how offering a retirement savings plan is a powerful tool for them to do just that. If you want to set up or switch to an a 401(k) that’s great for employees and employers, let your company know about Human Interest.
Avatar Liz Sheffield

Liz Sheffield has more than a decade of experience working in HR. Her areas of expertise are in training and development, leadership development, ethics, and compliance.

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