In the construction business, growth periods come with challenges. For instance, 401(k) plans and other benefits fuel the retention and recruiting goals that sustain growth. However, that same growth makes administering benefit programs all the more complicated.
Still, adapting to challenges is just par for the course. Like anything else in the business, successful 401(k) plan administration begins with understanding the pieces and parts involved. If you are ready to demystify 401(k) administration for your growing construction company, read on.
Navigating Growth
Benefits administration is one of the most critical and easily overlooked challenges a growing construction company faces. As a company scales up, more employees mean more work for administrators. Regulatory compliance challenges are not simply scaling with growth; the applicable regulations a company has to pay attention to can shift as it grows.
As with any aspect of growth, strategic planning is the key to successfully managing 401(k) benefits as you grow. A plan with a long-term view toward practices and procedures can make all the difference later. When you start out, your business may not benefit significantly from automation or a robust employee self-service portal. However, deploying scalable technology solutions ahead of expected growth can save time, money, and plenty of frustration down the line.
Successful companies are built intentionally and piece by piece. To build anything, you need a blueprint, and employee benefits should be included in that growth blueprint from the start. As soon as you know you are going to be growing, it’s time to talk with a qualified financial professional about employee retirement benefits.
Choosing the Right 401(k) Provider for a Workforce with Varied Needs
A growing team will include workers with various financial situations, language skills, and work schedules, including seasonal employees. Handling these differences requires a provider offering flexibility and comprehensive support to ensure your 401(k) plan effectively serves everyone on your team.
Start by looking at costs and transparency. Just like scrutinizing material costs, administrative fees and investment expenses for the 401(k) plan must be carefully considered. Look for providers that offer clear, understandable fee structures and affordable investment options.
Employees should also have access to transparent information about their individual costs. The more easily your workers can access information about their plans and make well-informed decisions, the more you will save on administrative costs. Even more importantly, the user experience your employees have with their plan will impact their overall satisfaction with their employment situation.
Flexible Plan Options
Flexibility can help you to meet the varied needs of a growing team. For instance, a plan that offers both pre-tax and Roth 401(k) options allows employees to choose the savings strategy that best suits their financial situation. Some providers may accommodate flexible eligibility requirements for construction companies with seasonal workers, such as lower hour thresholds for participation.
Employer Contributions and Safe Harbor Plans
Both employer contributions and Safe Harbor plans boost employee participation. Consider implementing a Safe Harbor 401(k) plan, simplifying compliance with IRS nondiscrimination tests. Matching contributions and profit-sharing can be built into plans as a percentage, providing a meaningful way to demonstrate commitment to employee financial well-being that doesn’t require significant additional administrative overhead to implement.
Payroll Integration and Automation
Many 401(k) providers will offer automated functionality such as seamless payroll synchronization, automatic enrollment, and mobile access. These features reduce your administrative burdens while simultaneously providing employees with a sense of empowerment by letting them manage their accounts on their own at any time of the day or night. Mobile account access is something most workers expect to be given in modern times, but you can also drill down into the functionality prospective providers present. Not all mobile account access is equal, and the more control and access employees have on their own, the less your administrative costs and time will be taxed.
Compliance and Fiduciary Support
An experienced retirement plan advisor can help you navigate the complexities of ERISA and DOL regulations. The provider should offer fiduciary support, including ERISA 3(16) management and assistance with annual testing. A strong, collaborative partnership with your plan provider will protect your company from potential liabilities by ensuring your 401(k) plan is always compliant.
Employee Education and Support
To cater to your team’s varied needs, offer materials in multiple languages, and simple investment choices. Education workshops — whether on-site or virtual — and clear marketing materials can help employees feel empowered and answer many of their most common questions before they even realize they need to ask
Scalability and Potential for Pooled Employer Plans (PEPs)
As your company grows, you need a provider that can support multi-site operations and simplify administration for a larger workforce. PEPs can reduce costs by leveraging economies of scale, making them an attractive option for growing construction companies.
Optimizing Your 401(k) Plan for Long-Term Success
Once you have a provider selected, there is still plenty to do. Optimizing and maintaining your 401(k) offerings will help you stay competitive in your benefits offerings and will also ensure you get the best value out of your plan.
Just like buildings, plans must sometimes be renovated to meet unanticipated challenges. Regulations, employee needs, and expectations, and even economic shifts can cause an existing retirement plan to become outdated. Long-term plans for managing and administering a 401(k) plan should detail how often the plan will be reviewed and benchmarks to help decide when to make changes.
Of course, optimization isn’t just about the administration side. On-site and virtual workshops with clear and informative materials can help employees stay up-to-date as their lives change. Access to financial advisors can help employees navigate their options and significantly boost participation rates.
As your company expands, managing contributions, record-keeping, and efficient reporting are critical to staying on top of things. Integrating payroll with your 401(k) system automates the tracking of contributions, reducing errors and administrative burdens. Similar to mobile access for employees, outsourcing compliance to a Third-Party Administrator (TPA) can further streamline operations..
No matter what options or providers you choose, you should schedule regular reviews, including face-to-face time with your provider, to ensure you are up-to-date and your employees receive the best plan options.
A Solid Foundation for Growth Starts Here
Growing construction companies need strategic and adaptable approaches to administering 401(k) plans. The right plan will foster financial security and enhance employee satisfaction by addressing the industry’s unique challenges and prioritizing employee needs. Partnering with the right providers, staying compliant, and providing comprehensive education and support will ensure your 401(k) plan contributes to your company’s and its employees’ long-term success.
Connect with our team today if you have further questions regarding 401(k) plans, and look out for more articles on conversations to help you build a better financial future for yourself and your employees.
