As a plan sponsor, you have a great opportunity to help your employees build their nest eggs for retirement. That said, the more informed you both are, the better your plan will serve them.
Here are 4 big mistakes to avoid in 2019:

1. Not knowing annual contribution limits have increased

In 2019, workers under the age of 50 can contribute up to $19,000 to a 401(k) or 403(b) plan, while those 50 and older can contribute up to $25,000 including catch-up contributions.

2. Not taking advantage of catch-up contributions

As the name implies, catch-up contributions allow savers 50 and over to make up for lost time by putting more money into their retirement plans during the final years of their working careers. With an IRA, savers 50 and older can contribute an extra $1,000 on a yearly basis. With a 401(k) or 403(b), the catch-up is $6,000 a year!

Just think, if you or one of your employees is 57 years old and you push yourselves to make a $6,000 catch-up in your 401(k) for the next 10 years. If that money delivers a 7% average annual return on investment, those catch-ups alone will add $83,000 to your savings! It pays to save as much tax-advantaged money as the IRS will allow you to.

3. Not taking advantage of the full match

Many employers who offer 401(k) plans match employee contributions to varying degrees. If you’re not currently offering this, you may want to consider enriching your retirement benefits and adding a matching feature in 2019. And if you already are, encourage your employees to contribute enough to get the full match. Educating them on what their total cost and their potential savings could look like will help! 

4. Not watching investment fees

Chances are your plan’s investment options run the gamut—from actively managed mutual funds to passively managed index funds. But what do these cost the plan and it’s participants? Index funds tend to come with substantially lower fees, but this isn't to say that actively managed funds have no place in your 401(k); just pay attention to the fees you're being charged and make sure they make sense.

The more strategic you are in managing your plan, the more money your employees stand to accumulate for retirement. Avoid these mistakes in the coming year and your employees could be happier for it during their golden years.



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