Plan Design Strategies to Attract and Retain Talent in a Competitive Job Market

Posted on May 8, 2025

In today’s labor market, offering a competitive salary isn’t always enough to attract and retain top talent. Employees are looking for more, particularly regarding long-term financial security. One powerful but often underutilized tool is a well-designed 401(k) plan.

A thoughtfully crafted 401(k) plan does more than help employees save for retirement; it signals that your company is invested in their future. Features such as immediate eligibility, generous employer matching, and automatic enrollment can significantly impact participation rates and employee satisfaction.

Matching Contributions Matter

Employer matching is a key motivator for participation. Consider a tiered or stretch match formula (e.g., 100% of the first 3%, then 50% of the next 2%) to encourage higher deferrals. A strong match not only boosts savings but also sends a clear message of support.

Immediate Eligibility and Vesting

Long waiting periods or lengthy vesting schedules can be a deterrent to new hires. Offering immediate eligibility and quicker vesting—such as a 2-year graded or even 100% immediate vesting—can differentiate your benefits package and reduce turnover.

Flexible Plan Features

Adding a Roth 401(k) option gives employees tax planning flexibility. Loan provisions, hardship withdrawals, and after-tax contributions also enhance the plan’s appeal, particularly for younger or mid-career employees managing multiple financial goals.

Education and Engagement

Even the best-designed plan won’t have impact without proper communication. Ongoing education sessions, easy-to-use portals, and personalized retirement projections can help employees make informed decisions and feel confident in their financial future.

In a competitive market, your 401(k) plan can be more than a benefit—it can be a strategic advantage.

This material is provided for informational purposes only, and is not intended as authoritative guidance, legal advice, or assurance of compliance with state and federal regulations.