Why the Best Retirement Plans Are Built Around People, Not Just Compliance
What if the retirement plan you offer your employees is actually pushing your best people out the door?
It is a question that stops most business owners in their tracks. And the honest answer, more often than they expect, is yes.
In my experience working with business owners over the past decade, across plan auditing, consulting, corporate benefits administration, and fiduciary advisory, the pattern is remarkably consistent.
A retirement plan gets established because the CPA recommended it or because a competitor was offering one. The paperwork gets filed, the box gets checked, and then something happens. Nothing. The plan sits there. Participation stays low. Employees either do not enroll, do not understand their options, or do not contribute enough to make a meaningful difference in their financial future.
And here is the part that rarely gets measured: the employees who leave for a better benefits package somewhere else.
A retirement plan is not a box to check. It is a statement about how you value the people who build your business.
Employee expectations have shifted. People still care about compensation, but as concerns about retirement among younger workers continue to rise, benefits play a larger role in how employees evaluate where they work.
A recent Employee Benefit Research Institute (EBRI) survey found that 78% of workers say retirement benefits are a major factor in deciding whether to stay with an employer or explore other opportunities. The plan itself is no longer just a benefit. It is a recruiting and retention tool.
So what separates a retirement plan that employees actually use and value from one they ignore?
That is a great question, and it is the one we help business owners answer every day. But before we get into the strategies, consider the data. These numbers tell the story of why a well-designed retirement plan matters and what happens when plan design is left on autopilot.
| Why It Matters: Retention and Cost |
| 78% | of workers say retirement benefits are a major factor in deciding whether to stay with an employer or leave (EBRI) |
| 5x | more likely to stay: employees satisfied with their benefits versus those who are not (Selerix 2025 Benefits Survey) |
| 50–200% | of annual salary: the cost of replacing a single employee when you factor in recruiting, onboarding, and lost productivity (Gallup) |
| Where Plans Fall Short |
| 53% | of plan sponsors do not even realize they are a plan fiduciary (JP Morgan 2025 DC Plan Sponsor Survey) |
| 47% | of defined contribution plans still do not use automatic enrollment (PLANSPONSOR 2025 DC Benchmarking Report) |
| 4.8% | of participants took a hardship withdrawal in 2024, up from 3.6% the prior year, signaling rising financial stress (Vanguard 2025) |
| What Works When Plans Are Designed Well |
| 3x | higher participation rates in plans with auto-enrollment compared to voluntary enrollment (Vanguard) |
| $158K | average account balance in plans with auto-enroll and auto-increase, versus $107K without those features (Bank of America 2025) |
| 20–30% | more savings after three years for participants in plans with both auto-enrollment and auto-escalation (Vanguard) |
Sources: Employee Benefit Research Institute, Selerix, Gallup, JP Morgan, PLANSPONSOR, Vanguard How America Saves 2025, Bank of America Participant Pulse 2025.
The data is clear. Plan design matters. Communication matters. Follow-through matters. And the business owners who treat their retirement plan as a living, breathing part of their benefits strategy are the ones retaining their best people. Below are seven ideas that can turn a retirement plan from a dusty compliance obligation into one of the most powerful tools in your business.
1. If They Cannot Find the Door, They Will Never Walk Through It
Think about the last time you tried to sign up for something online and the process was so frustrating you just closed the browser. That is exactly what happens with retirement plan enrollment when the process is too complicated, too manual, or too full of jargon employees do not understand.
The biggest barrier to retirement plan participation is not employee apathy. It is enrollment friction.
Amazon changed the way all of us think about transactions. One click and it is done. That expectation for a frictionless experience did not stay in online shopping. It followed consumers into every part of their lives, including the workplace.
Employers want frictionless administration. Employees want frictionless enrollment. And when there is friction, things simply do not get done.
When employees have to track down forms, decipher unfamiliar terminology, or figure things out on their own, many simply do not enroll at all. They intend to get around to it, but life gets in the way and the months turn into years.
Over time, that delay can create a significant retirement readiness gap between employees who got started early and those who kept meaning to.
The fix is often simpler than business owners expect. Clear enrollment steps during onboarding, written guides in plain language, a portal that is intuitive to access, and default contribution rates employees can adjust to their comfort level.
Think of it like a GPS. If you hand someone a destination and a simple route, they will drive. If you hand them a paper map with no markings, most of them will stay parked.
Has anyone on your team audited your enrollment process from the employee’s perspective in the last 12 months?
That is a great question, and one we walk through with every business owner we work with. You would be surprised how often the answer reveals gaps nobody knew existed.
And with SECURE 2.0 now requiring automatic enrollment for plans established after December 29, 2022, the landscape has changed. New 401(k) plans must enroll eligible employees at a default contribution rate between 3% and 10% of compensation, with annual automatic escalation of at least 1% per year until the rate reaches between 10% and 15%.
Employees can always opt out or adjust, but the default puts them on the right path from day one.
2. Your Match Is Only as Good as Your Message
Employer contributions are one of the most direct ways to tell employees their participation matters. A well-designed match does not just help employees save. It sends a message: we are investing in your future alongside you.
But plans can fall short when matches are poorly explained, structured in ways employees do not fully understand, or set so low that employees do not recognize the value. When employees cannot clearly see what they are getting, they contribute less than they otherwise would. That reduces engagement and diminishes the perceived value of the plan as a whole.
An employer match that nobody understands is an employer match that nobody uses.
There are several approaches that tend to move the needle. A traditional match up to a set percentage is the most common. Non-elective contributions provided regardless of employee deferral remove the participation barrier entirely. Tiered match designs that reward higher savings rates or employee longevity can encourage people to increase their contributions over time.
Think of a match like a fitness center membership subsidy. If the company pays 50% of the monthly fee and employees know about it, most of them will sign up.
But if the subsidy is buried in an email nobody reads, the gym stays empty. The match itself is only as effective as the communication around it.
When was the last time you surveyed your employees to find out if they understand how the match works and what they need to contribute to get the full benefit?
3. The Roth Question Your High Earners Cannot Afford to Ignore
A Roth feature can be a powerful addition for employees who expect their tax situation to change over time or who value having options when it comes to how their retirement income will be taxed.
Still, many employers either do not offer a Roth option at all or fail to explain when it might be useful. In some cases, employees default into pre-tax contributions simply because that is the only option presented clearly.
Do your employees know they may have the option to contribute on a Roth basis, and do they understand when that choice could benefit them?
That is a great question, and one that matters more in 2026 than ever before. Under SECURE 2.0, starting this year, employees who earned more than $150,000 in FICA wages in 2025 are now required to make their catch-up contributions on a Roth basis. This is not optional.
If your plan does not currently offer a Roth option and you have employees in that income range who are 50 or older, they cannot make catch-up contributions at all until Roth is added to the plan.
If your plan does not offer Roth and you have high-earning employees over 50, SECURE 2.0 just took their catch-up contributions off the table.
Beyond compliance, the Roth option tends to resonate with younger employees early in their careers, employees who want flexibility in future withdrawal taxation, and those balancing current budgeting with long-term planning. Without understanding their options, employees may miss opportunities to build tax diversification that could save them significantly in retirement.
4. Stop Handing Out Textbooks and Start Having Conversations
Most employees do not skip retirement plan participation because they are uninterested. They skip it because they are unsure. They do not know what options apply to them or how they will benefit. The information they receive feels either too technical or too generic to be useful.
Think of it this way. If you walked into a restaurant and the menu was written entirely in a language you did not speak, you would probably walk out, even if the food was excellent.
Retirement plan education works the same way. The content might be valuable, but if it is not delivered in a way employees can absorb, it does not matter.
The goal of plan education is not to make employees smarter about retirement. It is to make them confident enough to take the next step.
Short sessions, plain language, and recurring touchpoints tend to resonate more than a single annual meeting. Education is most effective when it is practical and action-oriented, giving employees space to ask the questions that actually matter to them.
Questions like: How much should I contribute to receive the full match? What is the difference between Roth and pre-tax? How do I choose investments if I am not an expert? What should I contribute to hit my target retirement date?
Some employers rely on dense materials, one-time presentations, or overly technical explanations. Others assume employees will figure it out on their own.
And many point to the online education tools provided by their plan custodian as evidence that resources are available. Those tools exist, and some are quite good. But the reality is that very few employees actually use them.
Employers who rely too heavily on promoting these digital libraries are satisfying a compliance requirement, not meeting their employees where they are. There is a meaningful difference between making information available and helping someone make a decision and act on it. That difference usually comes down to in-person guidance or one-on-one conversations, the kind of support that turns confusion into confidence.
If you sat down next to one of your newest employees and asked them to explain how your plan works, could they do it?
5. One Size Fits Nobody
One of the most common missed opportunities in retirement plan design is treating every employee the same. Plans are sometimes designed with a single average employee in mind, without considering how financial needs and priorities evolve over the course of a career.
A 28-year-old early in their career is focused on learning the basics and managing cash flow. A 45-year-old mid-career is thinking about increasing contributions and planning around family needs. A 58-year-old approaching retirement is evaluating timing, catch-up contributions, and what their income will look like on the other side.
Think of it like a shoe store that only carries one size. The product is fine. It just does not fit most of the people walking through the door.
A plan that speaks to one life stage and ignores the others will lose the employees it cannot reach.
And in 2026, the numbers work in favor of employees who are paying attention. The standard 401(k) deferral limit is now $24,500. Employees age 50 and older can contribute an additional $8,000 in catch-up contributions, for a total of $32,500.
Under SECURE 2.0, employees between the ages of 60 and 63 can take advantage of the super catch-up, contributing an additional $11,250 instead of the standard $8,000, for a total of $35,750. That is a meaningful increase for employees in their peak earning years who want to accelerate their savings. But only if they know the option exists.
| Category | 2026 Limit |
| Standard employee deferral (under 50) | $24,500 |
| Catch-up contribution (age 50 to 59, or 64+) | $8,000 |
| Total with standard catch-up | $32,500 |
| Super catch-up (ages 60 to 63) | $11,250 |
| Total with super catch-up | $35,750 |
| Combined employer + employee maximum (>age 50) | $72,000 |
SECURE 2.0 also reduced the service requirement for long-term part-time employees. Starting in 2025, employees who work at least 500 hours per year for two consecutive years must be eligible to make elective deferrals, even if they do not meet the plan’s normal eligibility requirements.
This means more of your workforce may now have access to your plan than you realize.
6. You Cannot Save for Tomorrow When Today Is on Fire
Retirement planning does not exist in a vacuum. Many employees are simultaneously managing emergency savings gaps, high-interest debt, student loans, rising household expenses, and anxiety around market volatility.
Asking them to think about retirement when they are stressed about next month’s rent is like asking someone to plan a vacation while their house is on fire.
Employees who are financially stressed today are not thinking about retirement tomorrow. And no amount of plan design will change that.
Some employers focus exclusively on retirement savings without acknowledging the financial pressures employees face day to day. The result is predictable: employees feel forced to choose between short-term stability and long-term planning, and in many cases, they opt out of retirement contributions entirely because other financial needs feel more urgent.
Does your benefits strategy address the financial pressures your employees face today, or only the retirement they may not be thinking about yet?
That is a great question, and one that often shifts how business owners think about their entire benefits package.
Retirement benefits become more impactful when paired with education or tools that help employees stabilize short-term decisions while still planning for the long term. Emergency savings programs, student loan assistance, financial literacy workshops, and access to guidance during major life transitions all contribute to a workforce that feels supported enough to participate in a retirement plan with confidence.
7. A Plan Without Follow-Through Is Just a Filing Cabinet
Some employers treat the retirement plan as a one-time project. The plan gets established, the enrollment meeting happens, and then it runs on autopilot. But employees benefit most when there is visible follow-through: regular check-ins, reminders, and access to support as questions arise or life circumstances change.
Think of it like planting a garden. You do not just put seeds in the ground and walk away. You water, you weed, you check on things.
A retirement plan needs the same kind of attention. Periodic reminders tied to raises, bonuses, or annual reviews. Clear points of contact when employees need guidance. Updates when plan features change or new options become available.
The difference between a plan that exists and a plan employees actually use is almost always the follow-through.
Without ongoing support, employees may stick with outdated contribution levels, miss opportunities to adjust their strategy as their lives change, or feel uncertain about whether they are making informed decisions. The plan itself may be well designed. But if nobody is tending the garden, the results will disappoint everyone.
Who on your team is responsible for checking in on the plan after the initial setup is done?
If the answer is nobody, you are not alone. And that is one of the most common reasons plans underperform. The good news is that it is one of the easiest things to fix.
The Rules Changed. Did Your Plan?
The regulatory landscape around retirement plans has changed significantly. SECURE 2.0, signed into law in December 2022, introduced over 90 provisions that are rolling out over several years.
Several key provisions are now in effect or taking effect in 2026, and business owners who are not aware of them could face compliance issues. Here are the changes that matter most right now:
Mandatory automatic enrollment: Plans established after December 29, 2022 must include automatic enrollment at a default rate between 3% and 10%, with annual escalation to at least 10% (up to 15%). Exemptions apply for businesses with 10 or fewer employees, businesses less than three years old, and church and governmental plans.
Roth catch-up mandate for high earners: Starting in 2026, employees with FICA wages above $150,000 in the prior year must make catch-up contributions on a Roth basis. Plans without a Roth option will need to add one or those employees lose access to catch-up contributions entirely.
Enhanced catch-up for ages 60 to 63: The super catch-up allows contributions of $11,250 instead of the standard $8,000 for employees in this age range. This provision is optional for plans, but offering it can be a meaningful benefit for experienced employees in their peak earning years.
Long-term part-time employee eligibility: Employees working at least 500 hours per year for two consecutive years must now be eligible for elective deferrals. Business owners with part-time staff should verify they are tracking hours and enrolling eligible employees.
Plan amendment deadline: Most plans have until December 31, 2026 to formally adopt plan amendments reflecting SECURE 2.0 changes, though plans must already be operating in compliance.
The plan amendment deadline is December 31, 2026. Compliance is not optional, and the clock is running.
One Team, One Plan, Your People: The Firm-to-Family™ Approach
Many of the ideas in this article are easy to understand on paper. Applying them is where the work happens.
Every business is different. Every workforce has its own mix of ages, income levels, financial pressures, and goals. A plan design that works for a 50-person manufacturing company looks very different from one that works for a 200-person technology firm.
I started my career as an auditor at a St. Louis-based accounting firm, where I saw retirement plans from the compliance and financial reporting side. I moved into retirement plan consulting, eventually advising on the management of over $1 billion in retirement assets.
But the experience that shaped my perspective most was spending several years inside a large corporate employer, where I was responsible for benefits strategy, plan design, and administration for both active employees and retirees. That combination of managing plans from the inside and advising on them from the outside is something I carry into every client conversation at Gatewood.
My role at Gatewood is to bring that dual perspective to every engagement. That means evaluating plan features, identifying participation gaps, benchmarking against industry standards, and providing ongoing support as employee needs change. It is not a one-time conversation. It is a relationship.
Is your retirement plan keeping pace with your business, or is it still built for the company you were five years ago?
Through our Firm to Family™ approach, we do not treat your retirement plan as a standalone product. We bring together the right expertise to help you make coordinated decisions that consider your employees, your business goals, your tax situation, and the long-term impact on the people who depend on your leadership. To learn more about why this matters, read Firm to Family: Why Financial Planning Must Change When Others Depend on Your Decisions.
That means your retirement plan consultant is working alongside Gatewood’s wealth planners, tax coordinators, and Investment Committee. If a plan design decision has tax implications for the business, we coordinate that. If an employee benefit strategy intersects with the owner’s personal wealth plan, we connect those conversations.
The same way we serve our wealth management families, we serve our business clients: as one integrated team, not a collection of disconnected advisors. For a closer look at what that team approach looks like in practice, see From Firm to Family: Why Your Financial Plan Deserves a Team.
The best retirement plans are not built by checking boxes. They are built by someone who understands your business, your people, and where you are headed.
If you are thinking about how your retirement plan fits into the bigger picture of supporting your employees and growing your business, we are here to help you work through it.
Important Disclosures
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Gatewood Wealth Solutions and LPL Financial do not provide legal or tax advice or services.
All investing involves risk including loss of principal. No strategy assures success or protects against loss.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
