Time's Ticking: Get Your 401(k) in Order Before Year's End

With just 100 days remaining in the year, it's a crucial moment for both employers and employees to ensure their 401(k) strategies are optimized. Fall serves as the final sprint in our financial journey—an opportunity to make impactful changes that could enhance both compliance and retirement outcomes. Let’s delve into four important tasks to consider as we approach the year’s end. Act now and set yourself up for a smoother, more prosperous future.

Conduct a Strategic Retirement Plan Review

For Employers: Now is the time to reflect on whether your current retirement plan supports your business goals and team dynamics. This autumn, evaluate all aspects of your plan: auto-enrollment settings, matching contributions, and eligibility criteria. Adjusting these elements before the year-end can prevent potential misalignment with your company’s evolving objectives. Your foresight can ensure your team has a plan that grows alongside them.

Get Ahead of Nondiscrimination Testing

For Employers: Use this period to begin preparing your census data and contributions for the upcoming year-end nondiscrimination tests. Reflect on historical results, and explore the benefits of safe harbor plans or qualified nonelective contributions if discrepancies are found. Being proactive now helps guarantee compliance, maintaining the tax-favored status of your retirement plan and providing security for your employees.

Review and Update Beneficiaries

For Employees: Take a moment to ensure your beneficiary designations are current and reflect any recent life changes, such as marriage, divorce, or the birth of a child. Updating these details is simple yet profoundly important, ensuring that your assets are distributed according to your wishes and sparing your loved ones from potential confusion or legal hurdles.

Maximize 401(k) Contributions

For Employees: Give thought to increasing your contribution rate. With the 2025 limits ($23,500 plus $7,500 for those aged 50+), the potential for tax advantages and compounding returns is significant. Even a slight bump can lead to substantial growth over time, making a meaningful difference in your retirement nest egg.

Though time is short, there's still an opportunity to make impactful adjustments. Implementing one or two of these changes can lead to better compliance and improved retirement readiness. Remember, proactive planning today means fewer headaches tomorrow and more confidence in your financial future. Don't hesitate to reach out to your financial advisor or HR team for guidance and support.