Simco Blog

Offering a 401(k) plan is an important part of a competitive benefits package, but simply having a retirement plan in place does not necessarily mean it is delivering the value you intended. A strong retirement plan should support both sides of the relationship. For employees, it should make saving for the future accessible, understandable, and manageable. For employers, it should support broader goals around recruitment, retention, financial wellness, and overall employee experience. Retirement plan participation has made significant progress in recent years. Vanguard's 2026 How America Saves report found that participation among eligible employees reached a record 86%, up from 65% when the study began 25 years ago. Vanguard points to improvements in plan design, including automatic enrollment, stronger default contribution rates, and employer support, as important drivers of that progress. For employers, that raises a useful question: Is your current retirement plan doing everything it could for your workforce? Here are seven areas worth reviewing. 1. Are Employees Actually Participating? Start with one of the simplest measures: how many eligible employees are using the plan? A retirement benefit can be well-designed on paper but have limited impact if a meaningful portion of the workforce never enrolls. Look beyond the overall participation rate and consider whether certain groups are participating less than others. New hires, younger employees, lower-paid employees, or particular departments may have different engagement levels. Low participation does not always mean employees are uninterested. Sometimes the issue is simply that enrollment feels complicated, information is unclear, or employees continue putting off a decision. 2. Are Employees Saving Enough to Make Participation Meaningful? Participation alone does not tell the entire story. An employee contributing a very small percentage of pay is technically participating, but may still be far from building the savings they need for retirement. Employers can review broader plan trends such as average contribution rates, how many employees are contributing enough to receive the full employer match, and whether participants tend to increase their savings over time. The goal is not for employers to determine how much any individual employee should save. Rather, it is to understand whether the plan's structure and communication are encouraging employees to take meaningful steps toward long-term financial security. 3. Is Your Employer Match Accomplishing What You Intended? Employer contributions can be one of the most visible and valuable parts of a retirement benefit. But it is worth periodically asking why your organization offers a match and whether the current structure still supports that objective. Is the goal to encourage higher savings? Strengthen recruitment and retention? Provide a more competitive benefits package? Support employee financial wellness? Employees should also understand how the match works. If participants are regularly contributing below the level required to receive the full employer contribution, that may indicate an opportunity for clearer education or communication. 4. Does Your Plan Make Saving Easy? One of the biggest changes in retirement planning over the past several decades has been the shift toward plan designs that make saving easier. Vanguard's 2026 research found that nearly two-thirds of plans with automatic enrollment now use a default contribution rate of at least 4%, while approximately one-third default participants at 6%. Features such as automatic enrollment and automatic contribution increases can help reduce the need for employees to make every decision on their own. Employers may also want to consider the everyday participant experience: Is enrollment straightforward? Is it easy to change a contribution rate? Can employees access their accounts without unnecessary friction? Are payroll deductions processed consistently? Can participants easily update beneficiaries or review plan information? Small barriers can have an outsized impact on whether employees actively engage with the benefit. 5. Do Employees Understand Their Retirement Benefit? Employees cannot fully value a benefit they do not understand. Retirement plans can involve unfamiliar terminology around contribution types, employer matches, vesting, investment options, distributions, and other plan features. For employees who are new to retirement saving, that information can quickly become overwhelming. Consider whether employees clearly understand: How to enroll How much the employer contributes, if applicable How the employer match works How to change their contribution Where to find plan information Who to contact when they have questions Retirement education also should not necessarily end after onboarding. Employees' questions and priorities change as their careers, compensation, and personal circumstances evolve. Clear, ongoing communication can help employees make more informed decisions and better appreciate the benefit their employer is providing. 6. Does the Plan Support Employees at Different Career Stages? A workforce rarely has one set of retirement needs. An employee just beginning their career may need help understanding why starting early matters. A mid-career employee may be balancing retirement savings with housing, childcare, or other financial priorities. Someone approaching retirement may have entirely different questions about contribution opportunities, account management, and the transition out of the workforce. A strong retirement benefit should be able to support employees across those different stages. That may include thoughtful plan design, educational resources, appropriate investment options, access to professional guidance, and communication that goes beyond a one-size-fits-all approach. 7. Does the Plan Still Fit Your Business? Retirement plans should evolve alongside the organizations that sponsor them. Your workforce may be larger than it was when the plan was established. Your recruiting strategy may have changed. Employees may now work across multiple states. Your internal HR or payroll team may have different capacity. Your compensation structure or benefits philosophy may have evolved. Those changes can all be reasons to revisit the current retirement plan. For some employers, an existing traditional 401(k) may remain the best fit. Others may benefit from changes to plan design, investment support, administrative structure, or a different retirement solution altogether, such as a Pooled Employer Plan (PEP) . The goal is not to change a retirement plan simply for the sake of changing it. It is to periodically confirm that the plan still aligns with the needs of both the organization and its employees. A Retirement Plan Should Do More Than Exist A 401(k) plan is more than an administrative requirement or another line on a benefits summary. When structured thoughtfully, it can become a meaningful part of the employee experience and an important tool for attracting, retaining, and supporting a workforce. Employers should periodically look beyond whether the plan is functioning and ask a bigger question: Is it producing the experience and outcomes we want for our people and our business? That review may include participation, savings behavior, employer contributions, employee education, plan design, investment support, and whether the overall structure still fits the organization. At Simco , we help employers evaluate retirement solutions based on their individual goals, workforce, and business needs. From traditional retirement plans to options such as the Simco PEP, our approach is focused on helping employers understand their choices and determine which structure makes the most sense for their organization. If it has been a while since your retirement plan was evaluated beyond its day-to-day administration, now may be a good time to take a closer look.

Big changes are on the horizon for New York businesses. Soon, many employers will be required to provide retirement savings options through the state’s Secure Choice Savings Program. If your business doesn’t already offer a retirement plan, now is the time to understand the rules, prepare your payroll, and explore whet

The Securing a Strong Retirement Act of 2022 (SECURE 2.0) has emerged as a significant milestone to improve small businesses’ access to retirement benefits. SECURE 2.0 builds on the initial 2019 SECURE law. The act focuses on retirement savings, such as 401(k) and 403(b) plans and individual retirement accounts (IRAs). The comprehensive rule was enacted on Dec. 29, 2022, and many of its provisions apply specifically to small businesses with 100 or fewer employees. A survey by ShareBuilder 401k revealed that only one-quarter (26%) of small businesses offer 401(k) plans. Many respondents stated that they didn’t offer plans because they thought their business was too small to qualify, they couldn’t afford to match contributions, and retirement plans were too expensive to set up and manage. Fortunately, by embracing new provisions offered through SECURE 2.0, small businesses can better support workers’ retirement plans. This article explores key aspects of SECURE 2.0 that small businesses should be aware of and suggests how they can use them to their advantage. Understanding SECURE 2.0 Provisions Congress’s passing of SECURE 2.0 is meant to improve small businesses’ access to retirement benefits, improve retirement rules and encourage more retirement savings. The act contains more than 90 retirement-related provisions, so consider these seven favorable provisions impacting small businesses: 1. Startup credit —The startup credit will cover 100% (up from 50%) of administrative costs up to $5,000 for the first three years of plans 1. established by employers with up to 50 employees. Small businesses joining a multiple employer plan (or MEP) are also eligible for the credit. The tax credit offering incentivizes employers by limiting the administrative burdens of establishing and managing retirement plans. 2. Starter 401(k) plans —Starting in 2024, employers who don’t already offer retirement plans can offer a starter 401(k) or safe harbor 403(b) plan to employees who meet age and service requirements. The starter plan provides an ideal first step for small businesses since employers aren’t required to match contributions. With this provision, even the smallest businesses can offer their employees something to help with retirement. Through this provision alone, the American Retirement Association estimates that 19 million workers will gain access to a workplace retirement plan. 3. Automatic enrollment —Beginning in 2025, many 401(k) and 403(b) plans will be required to enroll eligible participants automatically; however, employees may opt out of coverage. Remember, there’s an exception for small businesses with 10 or fewer employees and new businesses under 3 years old. The expansion of automatic enrollment is meant to help workers—especially younger and lower-paid workers—save for retirement. 4. Required minimum distribution (RMD) —At a certain age, savers must start withdrawing a minimum amount from specific retirement accounts, including 401(k) and traditional IRAs. Since Jan. 1, 2023, a provision for later-stage savers increased the RMD age to 73—and, in 2033, the RMD age will increase to 75. Furthermore, starting this year, Roth contributions won’t be included when calculating the RMD. 5. Part-time worker offerings —Starting in 2025, employers will be required to allow part-time employees with more than 500 hours per year after two consecutive years of service to participate in their retirement plan. Employees exceeding 1,000 hours of service will be included in plans after one year of service. This will increase the number of workers eligible to contribute to employer-sponsored retirement plans. 6. Student loan matching —Individuals with student loans can balance saving for retirement and repaying student loans instead of choosing one or the other. Starting in 2024, when a borrower makes a qualified student loan repayment, their employer may match that amount by contributing to a 401(k) plan, 403(b) plan or SIMPLE IRA. 7. 529 plans —A 529 plan (or college savings account) is a tax-advantaged plan used to pay for education expenses. Starting January 2024, 529 beneficiaries can roll up to $35,000 to a Roth IRA from a 529 plan if it’s been open for at least 15 years. Previously, 529 accountholders faced taxes and penalties for nonqualified withdrawals, so this change allows beneficiaries to roll leftover 529 funds (e.g., unused educational funds) to the beneficiary’s Roth IRA to help save for retirement. SECURE 2.0 changes may help American workers save for retirement while balancing current expenses. In turn, these changes also allow small businesses to support their employees with retirement savings, which can improve their attraction and retention efforts. Summary With most American workers employed by small businesses, employers must be empowered with the tools and resources to offer workers retirement options. Although complex, SECURE 2.0 presents many opportunities for small businesses to strengthen their employee benefits and support the overall financial well-being of their workforce. It’s critical for employers to stay informed on SECURE 2.0 changes and be proactive in their adoption. Contact us today for more workplace guidance.

Pooled Employer Plans (PEPs) have emerged as a game-changer in the retirement savings landscape, offering businesses and employees a streamlined and cost-effective approach to retirement planning. This article aims to demystify the concept of PEPs, exploring their structure, advantages, and the potential impact they can have on the retirement readiness of employees. What is a Pooled Employer Plan? A Pooled Employer Plan is a type of retirement savings arrangement established by the Setting Every Community Up for Retirement Enhancement (SECURE) Act in 2019. The SECURE Act introduced PEPs to encourage more small and medium-sized businesses to offer retirement benefits to their employees. PEPs enable unrelated employers to join a single retirement plan, sharing the administrative and fiduciary responsibilities, which can lead to significant cost savings. Key Features Multiple Employers, One Plan: PEPs allow unrelated employers to participate in a single retirement plan. This consolidation of resources is designed to make retirement benefits more accessible to a broader range of businesses. Administrative Efficiencies: By pooling resources, employers in a PEP can achieve economies of scale. This means shared administrative costs and responsibilities, reducing the burden on individual businesses and potentially lowering overall plan costs. Fiduciary Oversight: A PEP typically designates a pooled plan provider, responsible for assuming the role of the named fiduciary. This provider takes on certain administrative and fiduciary responsibilities, relieving employers of some of the legal obligations associated with offering a retirement plan. Benefits for Employers Cost Savings: PEPs offer the advantage of reduced administrative and operational costs. Sharing these expenses among multiple employers can result in considerable savings compared to maintaining individual retirement plans. Reduced Administrative Burden: Employers participating in a PEP can offload much of the day-to-day administrative tasks to the pooled plan provider. This allows businesses to focus on their core operations while ensuring employees receive valuable retirement benefits. Access to Expertise: PEPs are often managed by experienced professionals, providing a level of expertise that might be challenging for individual small businesses to secure. This can enhance the overall quality of the retirement plan. Benefits for Employees Enhanced Investment Options: PEPs, with their larger asset pools, may offer a more diverse range of investment options for participants. This can empower employees to tailor their investment strategy based on their individual preferences and risk tolerance. Increased Portability : As employees move between employers participating in the same PEP, they can maintain continuity in their retirement savings. This portability is especially beneficial in today's dynamic job market. Simplified Decision-Making: With the administrative aspects managed by the pooled plan provider, employees can enjoy a simplified and user-friendly experience when it comes to enrolling, managing contributions, and accessing information about their retirement plan. PEPs versus Traditional 401(k)/403(b) Compared to traditional 401(k) or 403(b) plans, PEPs offer a distinct advantage by consolidating administrative tasks. Traditional plans for individual employers often come with higher administrative burdens and costs, making them less feasible for smaller businesses. PEPs, with their shared responsibilities and reduced costs, level the playing field, allowing a broader spectrum of businesses to provide robust retirement benefits. Another notable difference lies in fiduciary responsibilities. In a PEP, a pooled plan provider assumes many fiduciary duties, alleviating individual employers from some of the legal obligations associated with managing a retirement plan. This shift in responsibility can be particularly advantageous for businesses with limited resources or expertise in retirement plan administration. In essence, while traditional plans continue to be a staple in the retirement benefits landscape, PEPs introduce a modern, collaborative approach that addresses the evolving needs of both employers and employees. The decision between a PEP and a traditional plan hinges on the specific requirements and circumstances of each employer, emphasizing the importance of a tailored approach to retirement planning. Contact Simco today for more information.

The Internal Revenue Service (IRS) has released Notice 2023-75 , containing cost-of-living adjustments for 2024 that affect amounts employees can contribute to 401(k) plans and individual retirement accounts (IRAs). 2024 Increases The employee contribution limit for 401(k) plans in 2024 has increased to 23,000 , up from $22,500 for 2023. Other key limit increases include the following: The employee contribution limit for IRAs is increased to $7,000 , up from $6,500. The IRA catch‑up contribution limit for individuals aged 50 and over remains unchanged at $1,000 for 2024 (despite this limit now including an annual cost‑of‑living adjustment because of legislation enacted at the end of 2022, referred to as “SECURE 2.0”). The employee contribution limit for SIMPLE IRAs and SIMPLE 401(k) plans is increased to $16,000 , up from $15,500. The limits used to define a “highly compensated employee” and a “key employee” are increased to $155,000 (up from $150,000) and $220,000 (up from $215,000), respectively. The annual limit for defined contribution plans (for example, 401(k) plans, profit-sharing plans and money purchase plans) is increased to $69,000 , up from $66,000. The annual compensation limit (applicable to many retirement plans) is increased to $345,000 , up from $330,000. The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $7,500 . Therefore, participants in these plans who are 50 and older can contribute up to $30,500 , starting in 2024. The income ranges for determining eligibility to make deductible contributions to traditional IRAs, contribute to Roth IRAs and claim the Saver’s Credit (also known as the Retirement Savings Contributions Credit) also increased for 2024. More Information The IRS’s news release contains more details on the cost-of-living adjustments for 2024.

A recent report by Clever Real Estate found that 69% of Generation X (Gen X) members want to retire by age 65, but only 37% believe they’ll be able to. Sometimes called the “forgotten generation,” Gen X refers to those born between 1965 and 1980. This generation expects to face many obstacles on the way to retirement, with 68% of survey respondents worrying they’ll have to reduce their standard of living in retirement and 11% believing they’ll never be able to retire.