In the construction industry, attracting and retaining skilled workers is no easy task. Between high turnover, seasonal employment, and the need to remain competitive in a tight labor market, providing meaningful benefits can make all the difference. A well-structured 401(k) plan is one of the most powerful tools a construction company can use to invest in employees’ futures while improving retention, morale, and compliance with evolving retirement plan laws.
This guide explores the unique challenges construction business owners face with 401(k) plans, practical design strategies, and best practices to ensure your plan works for both your employees and your bottom line.
The Unique Challenges of 401(k) Plans in Construction
Construction companies face a perfect storm of challenges when it comes to offering retirement benefits. High turnover and seasonal employment make consistent participation difficult, while IRS and Department of Labor compliance can be burdensome without dedicated HR staff. Costs covering employer contributions, fees, and audits can also give owners pause, even though tax credits under the SECURE Act offset much of the expense.
Employee participation can be another hurdle, especially when workers prioritize immediate paychecks or have limited financial literacy. Clear, ongoing education and automatic enrollment can help address this. And for busy owners with little time to master plan rules, partnering with an experienced, construction-focused advisor is often the key to running an effective, compliant plan.
Designing a Plan That Works for Your Workforce
An effective 401(k) in construction needs flexibility and simplicity. Flexible eligibility rules can control when seasonal or part-time workers qualify, while Safe Harbor provisions ensure equitable benefits and avoid complex testing. Automatic enrollment, combined with gradual contribution escalation, encourages savings and helps the plan meet participation benchmarks. Matching contributions, whether tiered or discretionary, allow companies to remain competitive without overspending.
Just as important is communication. Many construction teams are made up of different age groups, backgrounds, and literacy levels, so plan materials should be clear, visual, and available in multiple formats. Education isn’t a one-time event at enrollment; it should be ongoing throughout the year.
Making Your 401(k) a Talent Magnet
A well-designed retirement plan can be a powerful recruitment and retention tool. Even a modest employer match signals a commitment to employees’ long-term financial well-being. Offering faster vesting schedules can encourage loyalty, while adding features like Roth 401(k) options or loan and hardship withdrawals gives employees more flexibility.
In an industry where skilled labor is in high demand, benefits like these can set your company apart from competitors and help keep valuable workers on the team.
Educating Employees for Better Participation
The success of your plan depends on how well employees understand it. That means making education ongoing, engaging, and accessible. Onsite presentations, simple handouts, and one-on-one advisor meetings can go a long way toward building confidence and participation. Avoid technical jargon use real-world examples that resonate with the day-to-day lives of your workforce.
Building a Sustainable Contribution Strategy
Employer contributions are a balancing act between generosity and sustainability. A safe harbor match, such as 100% of the first 3% of pay plus 50% of the next 2%, can help with compliance while boosting retention. Discretionary matching allows you to adjust based on profitability, and a reasonable vesting schedule encourages long-term employment while protecting company resources.
Tax Benefits Worth Leveraging
Construction company owners should also make the most of available tax incentives. In addition to SECURE Act credits, employer contributions are tax-deductible, reducing taxable income while rewarding employees. Working closely with a tax advisor ensures you capture every available benefit and structure contributions in a way that aligns with your financial goals.
Building a Stronger Future with the Right Partner
A 401(k) plan in the construction industry isn’t just a benefit, it’s a strategic tool for workforce stability, business growth, and long-term financial health. Twelve Points Retirement specializes in guiding construction companies through every stage of the process, from plan design and compliance to employee education and investment oversight. With tailored advice, ongoing training for sponsors and employees, and diligent monitoring, they help ensure your plan is competitive, cost-effective, and fully compliant.
By designing a plan that addresses your workforce’s unique needs, leveraging available tax credits, and working with a specialized advisory team, you can create a retirement program that supports your employees and strengthens your company’s foundation for years to come. Contact us today to learn more.
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