If you’re paying much attention to the decorations in local stores, as well as house decorations increasingly popping up in neighborhoods, it’s not hard to realize that one of our most popular holidays is quickly approaching—Halloween. While many start to turn their thoughts to finding a creepy haunted house exhibit or finding the perfect Halloween costume, some individuals may not be able to focus on the joys of this time of year due to financial anxiety.
It’s increasingly clear that the United States is facing a scary retirement savings crisis with many individuals unprepared for a secure retirement. Unfortunately, not enough individuals feel secure about their retirement savings with data showing that an estimated 43%1 of workers between the ages of 45-54 have not saved anything for retirement, only 12%2 of workers ages 25-35 feel confident about their current financial situation, and one in four workers3 across all ages describe their finances in negative terms.
Employers can have a positive impact on the financial well-being and retirement readiness of their employees by leveraging some strategies and trends designed to increase retirement saving levels and expand overall participation in employer-sponsored retirement plans.
- Automatic Enrollment and Escalation Provision. SECURE Act 2.0 expanded on the concept of automatic enrollment and escalation provisions for salary deferral programs like 401(k) and 403(b) plans. These provisions have historically been optional for retirement plans to include, but SECURE Act 2.0 made these provisions mandatory for new 401(k) and 403(b) plans (i.e., with more than 10 employees) that began with the 2025 plan year.
This provision automatically enrolls new employees into the 401(k) or 403(b) plan at a default salary deferral rate (must be at least 3%) and automatically escalates the deferral rate for participants until it reaches a 10% deferral level. Employees are free to opt out of the deferrals anytime, but this provision has proven to be an effective strategy for increasing retirement savings and participation levels for some time. 401(k) and 403(b) plans established prior to 2023 are exempt from the mandatory requirement of including this feature, but they can certainly voluntarily choose to include the automatic enrollment and escalation provision as an effective retirement savings strategy. - Emergency Savings Account with Workplace Retirement Plans. This provision (known as Pension-Linked Emergency Savings Accounts, or PLESAs) was also included in the SECURE Act 2.0 regulation. This is an optional provision that employers can include within their workplace retirement plans, and it permits employees to designate a portion of their contributions within the retirement plan into a special account that can be utilized for any unforeseen circumstance. Contributions into this emergency savings account are capped at $2,500 and must be structured as a Roth contribution. Typically, a 10% penalty applies to early distributions from retirement accounts, but withdrawals from this new type of account are penalty-free and don’t require proof or verification of the emergency event. Ultimately, this provision is designed to address what has been a common barrier to employee participation in workplace retirement plans, the ability to access assets if there is an emergency.
- Student Loan Match. Another provision designed to address a frequent barrier for participation is qualified student loan payments (QSLPs). For many younger workers that are attempting to navigate student loan repayments and economic volatility, retirement savings can seem terrifying and it often takes a back-seat to more immediate financial needs. With this provision, employee payments for qualified education loans are treated as if they were elective salary deferral contributions for retirement programs like 401(k)s, 403(b)s, SIMPLE IRAs and 457(b) plans. The employer can then apply its standard matching formula to the student loan payment (up to the elective deferral plan limit) and deposit the matching contribution into the employee’s retirement account.
- Financial Wellness Resources. Employers can host informational sessions to educate employees about the benefits and importance of a number of critical retirement readiness topics, including financial planning, asset allocation strategies, budgeting and debt management techniques. However, despite the growing availability of workplace financial wellness programs, a significant gap exists in awareness and usage among employees. Data reveals that 34% of workers ages 35-62 say these resources are unavailable, while 21% are unsure if their workplace offers them.4 This is a great opportunity for employers to raise awareness and promote programs that teach critical retirement savings skills and techniques.
- Incentives and Rewards. In another effort to expand participation levels in workplace retirement plans, recent legislation now permits employers to encourage employee participation by offering small (i.e., de minimis) incentives, gifts and company-wide celebrations to acknowledge participation in company-sponsored retirement plans. This is a great approach for encouraging and rewarding the discipline of setting retirement goals and developing healthy savings habits.
These are just a few trends and strategies being utilized by employers looking to address the increasingly scary retirement savings data. Employers interested in implementing any of these provisions should consult with their retirement plan provider to review the availability and process of adopting these features for their specific workplace retirement plan. Also, consider speaking with your Benjamin F. Edwards financial advisor for any questions related to employer retirement plans and retirement savings strategies.
1Is It a Holiday Today – 2025 National 401(k) Day (Michael Rodriquez)
2ADP Retirement Services, Early Career Workers’ Perspective on Financial Challenges 2024
3ADP Retirement Services, Retirement Plan Loans & Withdrawals: Emergency Expenses and Debt Drive Utilization 2025
4Economicpolicyresearch.org
IMPORTANT DISCLOSURES: The information provided is based on internal and external sources that are considered reliable; however, the accuracy of this information is not guaranteed. This piece is intended to provide accurate information regarding the subject matter discussed. It is made available with the understanding that Benjamin F. Edwards & Co. is not engaged in rendering legal, accounting or tax preparation services. Specific questions on taxes or legal matters as they relate to your individual situation should be directed to your tax or legal professional.
5995916 Exp. 10/31/2029