We recently discussed automatic features that can help your employees create a paycheck for life. I’ve given you the first four elements of courageous plan design. In case you forgot, they are:

  • Automatic enrollment
  • Automatic escalation of the deferrals
  • Automatic investment into the qualified default investment alternative
  • Automatic re-enrollment of both the investments and those not contributing

The fifth element to courageous plan design and the topic for today is called the stretch match. There are two main benefits:

1. It gives your employees the opportunity to save more now. We know that gives them the opportunity to get to that retirement bullseye sooner and they can retire on time with a paycheck for life.

2. It helps your highly-paid employees contribute more in a non-safe harbor plan. If your employees are able to contribute more because they see you contributing more, they will be very happy.

“The stretch match is a win-win situation for you and your employees.”

What is the stretch match concept? Let’s say you match 50% of the first 4%. You simply stretch it out and match 25% of the first 8%. Your employees are smart and will take advantage of other people’s money. A lot of them will look to increase their contribution right to 8%.

This is just one element of courageous plan design but a very important one, especially if you don’t have a safe harbor plan. If you have any questions about this topic or would like a courageous plan design created for you, give us a call or send us an email. We look forward to hearing from you.