Q: I overheard a surprising conversation between two of our employees. In short, one told the other that his 401(k) account at his former company just goes back to his ex-employer. I brought the employee in and gave him the contact information for our plan’s advisor so he can get correct information. But it made me wonder how we’re really doing in educating employees about our plan.
A: Communicating with employees about the plan is at least a two-part process. Part 1 is providing the education, and part 2 is determining how well it works. You are fortunate to have stumbled upon Part 2. Don’t feel bad if your education efforts are falling short, though, because you aren’t alone. Fisher Investment 401(k) Solutions found some holes in participants’ understanding of their 401(k) plans, through their 401(k) Wellness in the Workplace Survey, covered in 401kSpecialist Magazine. The knowledge gaps uncovered by Fisher may help you determine the next topics to address for your employees. A few subjects on which you may want to educate employees include loans, taxes, and asset classes. One-third of Fisher’s survey respondents thought that most plans don’t allow loans, 23% did not know their contributions reduce their taxable income, and 77% could not accurately define “mutual fund” when presented with a list of descriptive statements.