Increase Your Deferral Rates

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I want to go deeper on step one of analyzing your plan and give you some ideas on how to improve the outcome for your plan participants.

But first, let me ask you a question.

The real question is, how can you as a company that sponsors a 401k or 403b plan, turn your plan from a liability into an asset that gives you an advantage in the marketplace, and become a 401k superhero to your employees?

That is the question, and these videos will give you the answers. Hey I’m Jonathon Schultheiss and welcome to the Ultimate 401k Advantage videos.

So lets say you’ve completed step one and you’ve analyzed your retirement plan. And one of the things that you found was that your average deferral rate is very low, and you want some ideas on what you can do to improve it.

Why might you want to improve your participation? Maybe you just want your participants to be better prepared for retirement or maybe you’re having testing issues and highly compensated employees are getting refunds.

Here are three tips that will help you improve your deferral rate.

First is probably the simplest. You can just add auto enroll for all participants below a certain amount.

For instance, you could take all of your employees who are saving less than 4%, and auto enroll all of those employees at 4%.

Tip number two, you add auto increase to your plan. Maybe you don’t want to make a big move all at once, and you want to gradually increase your deferral rate a little at a time.

You could increase your participants by as little as 1% a year until they get to your desired deferral limit.

Here’s another tip, you can actually combine tips one and two. You could auto enroll at a lower percentage, then use auto increase each year until they get to a higher percentage.

We have a client that just implemented a 4% auto enroll and added a 1% auto increase until participants reach 8%.

Keep in mind that with these auto features, a participant can opt out at any time.

And the third tip is for those who don’t like auto features at all. And that is to add gamification to your enrollments.

Here’s an example. We have a client that adds gamification to their enrollment meetings every year. They give away one ticket to every employee who either gets enrolled or makes an increase in their retirement savings.

Then at the end of the meeting, they do a drawing and give away prizes based on who got tickets.

This has made a big impact in the overall savings rate of this plan. In fact, this is a company with lower wages and high turnover, and they have an 8% average deferral rate with no automatic features, just using gamification.

If you’d like to learn more about these tips and how you can apply the Ultimate 401k Advantage 5 Step Process to your retirement plan, then grab a free copy of my book by going to, or clinking on the link above.