Attract Millennials with Values-Based Investment Options

It isn’t surprising that average contributions are generally lower for younger 401(k) plan participants. Not only is retirement much farther down the road for them than it is for their Generation X and baby boomer colleagues, many of them struggle with more debt and less income. On average, they contribute about 5.3% of pay to their retirement plans, compared to 6.6% for Gen Xers and 8.6% for baby boomers.

Helping your millennial population save for retirement can start with financial wellness education. Topics like budgeting and debt management are important. But more companies are recognizing that including Socially Responsible Investing (SRI) options in the plan could provide the encouragement this group needs to take to increase their retirement savings.

Of millennial plan participants in a recent survey, 84% would like their investments to reflect their personal values. Seventy percent said they are concerned about the environmental, social and ethical records of the companies in which they invest. In fact, 84% also said they would likely increase their contributions to the retirement plan if they felt confident that their investments were doing good in the world.

Your plan’s advisor may have suggestions about SRI options you could add to your plan menu. If you decide to do so, be sure to include these options in your communications. Learn more about SRI from Natixis Global Asset Management, here: https://tinyurl.com/NatixisDCSurvey.

Plan Sponsor’s Quarterly Calendar

JULY

  • Conduct a review of second quarter payroll and plan deposit dates to ensure compliance with the Department of Labor’s rules regarding timely deposit of participant contributions and loan repayments.
  • Verify that employees who became eligible for the plan between April 1 and June 30 received and returned an enrollment form. Follow up for forms that were not returned.
  • Ensure that the plan’s Form 5500 is submitted by July 31, unless an extension of time to file applies (calendar-year plans).

AUGUST

  • Begin preparing for the distribution of the plan’s Summary Annual Report to participants and beneficiaries by September 30, unless a Form 5500 extension of time to file applies (calendar-year plans).
  • Submit employee census and payroll data to the plan’s recordkeeper for mid-year compliance testing (calendar-year plans).
  • Confirm that participants who terminated employment between January 1 and June 30 elected a distribution option for their plan account balance and returned their election form. Contact those whose forms were not received.

SEPTEMBER

  • Begin preparing the applicable safe harbor notices to employees, and plan for distribution of the notices between October 2 and December 2 (calendar-year plans).
  • Distribute the plan’s Summary Annual Report by September 30 to participants and beneficiaries, unless an extension of time to file Form 5500 applies (calendar- year plans).
  • Send a reminder memo or email to all employees to encourage them to review and update, if necessary, their beneficiary designations for all benefit plans.

Consult your plan’s financial, legal or tax advisor regarding these and other items that may apply to your plan.

Kmotion, Inc., 412 Beavercreek Road, Suite 611, Oregon City, OR 97045; 877-306-5055; vwwv.kmotion.com

© 2018 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance, nor as the sole authority on any regulation, law, or ruling as it applies to a specific plan or situation. Plan sponsors should always consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.