Betterment Editors

5 ways small to mid-sized businesses can attract and retain employees Sep 11, 2024 10:04:49 AM Our recent survey of 1,000 full-time U.S. workers uncovers five ways to attract and retain employees of small businesses. According to the U.S. Chamber of Commerce, companies are “facing unprecedented challenges trying to find enough workers to fill open jobs.” In today’s competitive job market, data from our recent survey has found that small to mid-sized businesses can—and should—consider expanding their employee benefits packages to attract and retain talent. In our 2023 Retirement Readiness Annual Report, we surveyed 1,000 full-time U.S. workers to learn more about how retirement readiness and financial well-being have evolved over the last year. And what employees told us about financial benefits could help small businesses build loyal workforces. One of the report’s findings revealed that retirement security appears to decrease by company size. Only 8% of small business employees expect to have a million or more dollars saved for retirement, compared to 17% of midsize and 16% of large business employees. With that in mind, here are five employee financial benefits that smaller companies can implement to help support and retain their staff. 1. Offer a 401(k) program with matching contributions Out of all financial benefits, a 401(k) program is the place to start if you are aiming to attract and retain employees. According to the Retirement Readiness Annual Report, a 401(k) plan is the most desired benefit among employees, yet only 59% of employers currently offer access to a 401(k). A few other stats from the report jumped out at us, showing the demand for these benefits: For employees with access to a 401(k), 83% reported they contribute to that 401(k). 68% of workers receive a match from their employer—a 23% increase from the year before. Of the employees who receive an employer match, 86% contribute enough to get the full match. 92% of employees without a 401(k) match wish their employer matched, a 16% increase in one year. When you offer a 401(k) with employer-matching contributions, your company not only shows that you care about your employees’ future but you also provide a significant financial incentive for employees to stick around. It’s a win-win situation: Employees save for retirement, and you benefit from increased loyalty and reduced turnover. 2. Implement a student loan/401(k) matching program Offering a 401(k) match on student loans can help employees save for retirement while they pay off their college debt. Student loan debt is a major concern for many employees, especially younger ones. And student loans only become more stressful when one is trying to balance saving for retirement at the same time, as our report shows: 40% of workers currently have student loan debt that they’re responsible for paying down. 64% of borrowers said their student debt has impacted their ability to save for retirement. Almost half (49%) of employees believe that employers should play a role in helping them pay off their student loan debt — this was felt most strongly among Gen Z (71% of whom agreed). Through Betterment at Work’s industry-first solution, employers can provide 401(k) matches on student loan payments. This innovative benefit shows that you understand the financial challenges your employees face and are willing to help them manage both short-term and long-term financial goals. 3. Provide an employer-sponsored emergency fund Financial emergencies can strike at any time, leaving employees stressed and distracted. An employer-sponsored emergency fund can offer a safety net that can reduce financial anxiety. According to our report: 49% of employees said an employer-sponsored emergency fund would reduce their financial anxiety. Just over half (52%) of employees reported currently having an emergency fund — a seven percentage point drop from 2022 (59%), and a 14 percentage point drop from 2021 (66%). 51% of small business employees used their emergency funds, dropping to 43% for workers at midsize and large businesses. Of all generations, millennials (53%) tapped their emergency funds the most — compared to 49% of Gen X, 46% of Gen Z, and just 27% of boomers. One of the most striking statistics in our report is that only 8% of employers offer an employer-sponsored emergency fund, yet it is the third most valued benefit for employees — making it the largest gap of any benefit. In a world where nearly four out of five workers (78%) reported that their finances cause them anxiety, offering an emergency fund shows you care about their well-being. This may lead to higher job satisfaction and increased loyalty, as employees feel supported and valued. 4. Offer access to a live financial advisor Navigating the complexities of personal finance can be confusing. By providing access to a live financial advisor as a financial benefit, you can make a significant difference in your employees’ financial lives. Offering this benefit helps employees make informed financial decisions, including planning for retirement, debt management, estate planning, and more. Our report found that: Only 17% of employees report having access to a financial advisor through their employer. For those who don’t have access to an advisor through their employer, 50% reported that they would want that as a financial wellness benefit and 59% would want to meet with them two to three times a year. Small business employees meet with advisors most at 75% of employees —compared to just 42% of large business employees. Thomas Moore, Sr. Director of Betterment for Advisors, sums it up well, stating that access to a financial advisor “presents a huge opportunity for employers to differentiate by providing more holistic wellness programs to their employees — benefits packages should start, but not end, with the 401(k).” 5. Provide access to a 529 college savings plan Education expenses can be a significant financial burden. And for some parents, it’s a double burden if they are paying off their own student loans while attempting to save for their children’s education. By offering access to a 529 college savings plan, you can help employees save for their children's education and alleviate some of that stress. Our report highlights that: Over a quarter (26%) of employees are currently saving money for education expenses, but less than half (45%) are currently using a 529 education savings plan due to inaction and lack of awareness. Only 5% of employers currently offer 529 plans, which is surprising since, according to research, 70% of parents are concerned about having enough funds to pay for college. Offering a 529 plan can help attract employees who are thinking about their children’s future and want to work for a company that supports their goals. Offer financial benefits your employees want Betterment at Work makes it easy for small and mid-market businesses to provide a scalable 401(k) plan with an employer match. Plus, our platform empowers you to offer additional benefits like 529 plans, student loan payment 401(k) matches, and 1:1 advice from our financial advisors. Set up a call today to learn more.

Bridging the Gap: Benefits Employees Want vs Benefits Companies Offer Aug 19, 2024 2:11:57 PM We explore new survey data that reveals where financial benefits typically fall short—and what you can do about it at your company. Table of Contents: 3 benefit themes for employers to consider How to conduct a benefits gap analysis Survey results: The employee/employer gap In our 2023 Retirement Readiness Annual report, Betterment at Work surveyed 1,000 full-time U.S. workers to learn more about how retirement readiness and financial well-being have evolved in the last 12 months. We asked survey respondents to review and rank 11 potential benefits to determine what financial benefits employees currently have access to and which matter most. The results? Survey findings showed clear gaps in employee desires and the benefits being offered by their employers. To help explore these gaps, we’ve bucketed benefits into three themes that arose from the report’s findings: 401(k), financial planning, and education savings. 3 benefit themes for employers to consider As we reviewed the survey results, three themes emerged that employers can use to explore potential gaps in the benefits they offer compared to the benefits their workforces want. Theme 1: 401(k) benefits These benefits include: 401(k) plans 401(k) matching programs A 401(k) plan is the #1 desired benefit among employees. However, only 59% of employers currently offer access to a 401(k), up seven percentage points from the previous survey. That is positive growth, showing companies are continuing to recognize this as a crucial need for employees. If you don’t offer a retirement plan, you may want to explore 401(k) options that can help attract and retain talent. A 401(k) matching program was the #2 most desired benefit among employees. Less than half of companies offer a 401(k) matching program, with only 47% percent of workers receiving a match from employers. Of that group, 86% contribute enough to get the full match. It’s no wonder that 92% of those without a 401(k) match wish their employer would offer a 401(k) match—since these programs can help fast-track retirement savings and retain employees. Key takeaway for employers: Offer an easy-to-use 401(k) plan with a competitive matching program to attract and retain employees. Theme 2: Financial health and planning benefits These benefits include: Employer-sponsored emergency fund Flexible spending account (FSA) or health savings account (HSA) Wellness stipend Budgeting and savings tools Access to a live financial advisor Childcare support Employer-sponsored emergency funds were the #3 desired benefit. Only 8% of employers offer an employer-sponsored emergency fund. As the third most valued benefit for employees, this is the largest gap on the list. Our survey also found that 49% of employees said an employer-sponsored emergency fund would help reduce their financial stress. With 46% of employees reporting that they used their emergency fund during the past year, there is a great opportunity for employers to address. Flexible spending account (FSA) or health savings account (HSA) ranked #4. At number four on the list of most desired benefits, FSAs/HSAs are only offered by 37% of companies, which could be another important avenue for employers to explore. Furthermore, we found that 31% of employees said they would be enticed to leave their jobs for an FSA or HSA. Wellness stipends were #5 on the most desired benefits list. Wellness stipends are one of the larger gaps employers should consider. We found that 32% of employees said they would be enticed to leave their jobs for a wellness stipend. However, only 9% of companies offer the benefit. The increasing interest in wellness benefits reflects a growing awareness around mental and physical health in society. Employers who are equipped to meet this need clearly demonstrate their support for well-being in the workplace. Budgeting and savings tools ranked #6 on the list. Only 12% of employees offer budget and savings tools to employees. Similar to other benefits, over a quarter (26%) of employees would consider leaving their jobs for budget and savings tools. Examples include savings calculators, online budgets, educational resources, and the ability to link multiple accounts to see all savings in one view. With 78% of workers reporting that their finances cause them anxiety, financial tools may help them gain clarity and reduce the stress of their financial lives. Access to a live financial advisor was #8. Only 17% of companies offer access to a financial advisor. However, our survey found that 55% of workers with access to a financial advisor have met with the advisor in the past year, and that number jumps to 75% among small business employers. The top two reasons employees meet with an advisor are: retirement planning and investment advice. This data supports the idea of packaging your 401(k) plan with a financial advisor for a valuable employee benefit. Childcare support was the #10 most important benefit. Child care is expensive for parents to afford and for employers to offer as a benefit, which is likely why only 8% of companies offer it. But if you can afford to offer childcare support as a benefit, you’ll be assisting your employees with both convenience and a huge financial benefit, as the average cost of childcare is $11,582. Key takeaway for employers: Offering a benefits package that helps meet critical needs can go a long way with your employees. But you don’t have to offer everything. Rather, it’s important to understand your workforce’s needs to pick and choose which benefits will have the most meaningful impact. Theme 3: Student loan and education benefits These benefits include: Student loan 401(k) matching programs Student loan financial assistance or repayment programs 529 college savings plan Student loan 401(k) matching programs were the #7 most desired benefit. This is where paying for education and saving for retirement collide. With the passage of SECURE 2.0 Act, qualified student loan repayments made by employees can count as elective deferrals and qualify for 401(k) matching contributions from an employer. At the time of our survey, no companies offered this type of benefit, yet we found that 40% of workers currently have student loan debt that they’re responsible for paying down. Now, through Betterment at Work’s industry-first solution, employers can provide 401(k) matches on student loan payments. Student loan financial assistance or repayment programs ranked #9 on the list. Only 11% of employers were reported to offer student loan financial assistance or repayment programs. On top of that, we found that 21% of employees would be enticed to leave their jobs for financial assistance on student loans. 529 college savings plans ranked #11 on the list of most desired benefits. Only 5% of employers currently offer 529 plans, which is surprising since, according to research, 70% of parents are concerned about having enough funds to pay for college. Our survey also found that 26% of employees are currently saving money for education expenses, and of that group, only 45% currently use a 529 to do so. One of the main reasons is a lack of awareness around this state-sponsored plan. Savvy employers can use 529 plans to support the education savings plans for their employees. Key takeaway for employers: To help retain employees, create benefits programs that align with your workforce’s education-related needs, taking student loan debt into account as well. Also, as your workforce evolves, consider future employees and the potential education needs they may have. How to conduct a benefits gap analysis Employers can take the following steps to identify gaps and then implement new benefits that fit their workforce’s needs. Step 1: Make a list of the benefits you don’t offer You likely offer some benefits already. To conduct a gap analysis, you’ll want to focus on what you don’t offer. At this point, make a list of benefits you don’t offer with a description of each. Then compare the benefits you currently offer with ones you might want to add. You’ll likely want to avoid offering a new benefit that is similar in nature to a current benefit. For example, you may want to offer only one type of student loan benefit. Step 2: Run a cost analysis Now, you need to know if you can afford additional benefits. Create a mock budget to illustrate the financial impact on your business for each benefit. Be sure to model the estimated impact that offering each benefit may have on employee acquisitions and retention. This can be difficult to calculate, so consider different scenarios. What you’re really trying to do is calculate the ROI of each benefit’s ability to retain employees. After you run a cost analysis, eliminate any benefits from the list that your business simply cannot afford. (Bonus: Download our planning guide to calculating the ROI of your 401(k) plan.) Step 3: Survey employees Bring your team into the conversation. Once you’ve determined what benefits you can afford, survey your employees to measure their interest in each one. Be sure to include a clear description of each benefit and how it would be administered. A simple approach is to have employees rank benefits in order of most likely to use to least likely to use, and give them a chance to submit open-ended comments. For larger companies, you can also use more sophisticated polling methods such as MaxDiff surveys to identify the ideal mix of benefits for your workforce. Implement your benefits… Once you understand which benefits you can afford to implement, and which ones your employees value most, you’ll want to decide if you can provide the benefits in-house or if you need to partner with a benefits provider such as Betterment at Work. Survey results: The employee/employer gap The chart below shows a snapshot of the top 11 benefits ranked in order of most desired by employees with the percentage of employers who offer each benefit. Use this data as a starting point to help identify gaps in your financial benefits program. Bridge the benefit gap at your company Betterment makes it easy for small and mid-market businesses to provide a scalable 401(k) plan, plus offer additional benefits like 529 plans, student loan payment 401(k) matches, and 1:1 advice from our financial advisors. See how Betterment at Work can enhance your financial benefits package.

What are unallocated funds? Jul 22, 2024 4:29:27 PM Unallocated funds are non-invested assets within the plan. Many 401(k) plans have unallocated funds as a result of daily plan administration. Plan sponsors can view the balances of their unallocated funds under the 401(k) Plan tab >> Activity in their Plan Sponsor Dashboard. There are three types of unallocated funds: Forfeiture funds Suspense funds Cash funds We’ll describe each of these below. What are Forfeiture funds? Where do they come from? Forfeitures can arise in two main ways: When participants are auto-enrolled in the plan and choose to request their money back (within the 90-day permissible window under EACA), any employer contributions associated with those returned participant contributions become Forfeiture funds. Unvested contributions: When terminated participants have unvested contributions, take a distribution, or incur a 5-year break in service, and have unvested employer contributions, those unvested employer contributions associated with the terminated participants’ distribution become Forfeiture funds. How can Forfeiture funds be used? The way they can be used is written into the plan document. Generally speaking, they can be used to: Pay eligible plan expenses. Offset employer matching or profit sharing contributions. Allocate to eligible participants as additional employer contributions. Forfeitures cannot be used as elective deferrals. Timing requirements Depending on the plan document, Forfeiture funds generally should be used before the end of the following plan year in which the forfeiture occurred. What are Suspense funds? Where do they come from? Suspense funds mainly arise due to excess employer contributions or over-contribution of the employer match due to pre-funding the employer match for the year or profit-sharing (including the IRS 415(c) limits). How can suspense funds be used? Suspense funds can only be used to offset employer contributions or allocated to eligible participants as additional employer contributions. They cannot be used to pay for plans fees. Timing requirements These funds should be used as soon as administratively possible, but typically no longer than the end of the plan year in which they occur. What are Cash funds? How do they come up? Assets in the cash fund arise from payroll corrections and other miscellaneous recordkeeping-related tasks that result in excess money in the plan’s trust. How can they be used? Generally speaking, these funds can be used to offset employer contributions. These funds, along with the other unallocated funds, cannot go back to the plan sponsor except when specifically directed as a “mistake of fact”. The “mistake of fact” rules set in place by the IRS are quite narrow, and it is often unclear whether a particular error meets the “mistake of fact” standard: plan sponsors are required to affirmatively attest to when they use “mistake of fact”. In instances where assets are placed in the plan’s cash account, generally they are only there temporarily pending further action directed by the plan sponsor. How can unallocated funds be used towards payroll at Betterment? Based on the plan sponsor’s direction, Betterment will automatically apply unallocated funds to offset employer contributions during upcoming payrolls. The order of operations of fund usage is: Suspense, Forfeiture (the oldest eligible year then current year), then Cash funds. Betterment will automatically apply the regulatory timing restrictions of when certain funds need to be used by. If the unallocated funds cannot cover the entire employer contribution portion of a particular payroll, an entire employer portion of a particular payroll (or if there are no remaining unallocated funds), then the plan’s bank account(s) will be used to cover the outstanding amount. Unallocated funds can only be applied to a specific employer portion of a payroll if the automated usage setting is turned on before the payroll is approved (otherwise the funds would be applied to the next payroll). Plan sponsors can find details on the amount of each unallocated fund that was applied towards a payroll on the Payroll Overview page in their dashboard. If a plan does not want unallocated funds to be applied automatically towards payroll, but would rather use funds for a specific payroll, a “mistake of fact” return, or towards a year-end contribution, then the plan should reach out to Plan Support. This automated function will be turned on for all plans unless you (as plan sponsor on behalf of your plan) direct us to opt-out. Reports guide To see granular information on how funds were generated or used, utilize the Forfeiture fund, Suspense fund, and Cash fund reports. Use the Unallocated fund summary report to view the yearly balances of each fund. Please note, the Forfeiture fund, Suspense fund, Cash fund, and Unallocated fund summary reports were previously named the Forfeiture account, Suspense account, Cash account, and Plan accounts summary, respectively. Glossary (for terms used in the reports) Correction_redistribution: Typically a payroll correction to add money towards a specific employees’ payroll contributions that should have originally been made. Compliance_inflow: Inflow to participants – anything related to year-end compliance testing that causes funds to be added to the plan/participants (i.e. True ups, QNECs, ADP/ACP, Top Heavy, Lost Earnings). Corrective_transfer: Outflow from participants – compliance outflow (i.e. ADP Test, ACP Test, 415 Annual Additions Excess, Funding in Excess of Formula). Component_reversal: Typically a payroll correction to reverse payroll contributions that should not have been made. Year_end_contribution: Employer contributions only (typically annual additions added during compliance season but can also occur at anytime to correct issues). Interested in bringing a Betterment 401(k) to your organization? Get in touch today at 401k@betterment.com.

Key 2024 Deadlines for 401(k) Plan Sponsors Mar 20, 2024 10:32:00 AM Birthdays, wedding anniversaries, and 401(k) plan compliance deadlines. Some dates are worth saving more than others. Keep reading for important deadlines associated with your 401(k) plan. Plan sponsors have several responsibilities throughout the year to keep their plan operating in compliance with federal regulations. We’ve listed some key 2024 deadlines and links to more information below to make your life a little easier. If a deadline falls on a weekend, it’s safe to submit the previous business day unless otherwise noted. Please also keep in mind there may be additional state regulations applicable to your plan not listed here. January February March April May June July August September October November December Remaining of 2023 January Saturday, Jan. 13, 2024 Betterment at Work loads the prior year census template and compliance questionnaire to plan sponsors’ Compliance Hubs. Plan sponsors have until Tuesday, Jan. 31 to complete and submit both documents. Wednesday, Jan. 31, 2024 Send Form W-2 to your employees. Submit Form W-2 to the Social Security Administration. Submit the prior year census data and compliance questionnaire to Betterment at Work. Submit Annual Return of Withheld Federal Income Tax (Form 945) to the IRS. If you’ve made all your deposits on time and in full, then the due date is Saturday, Feb. 10. Send Form 1099-NEC to both the IRS and your employees. Betterment at Work makes IRS Forms 1099-R available to participants. February Thursday, Feb. 1, 2024 Post the prior year’s OSHA Summary of Illness and Injuries in your workplace between February 1 and March 2. Wednesday, Feb. 28, 2024 For Applicable Large Employers (ALE) Submit paper Forms 1094-C and 1095-C to the IRS. If you intend to e-file your forms, then the deadline is Sunday, March 31. For self-insured, non-ALE companies Submit paper Forms 1094-B and 1095-B to the IRS. If you intend to e-file your forms, then the deadline is Sunday, March 31. Note: Form 1095-B must be filed electronically if the reporting entity is required to file 250 or more returns. March Friday, March 1, 2024 For companies that participate in a Multiple Employer Welfare Arrangement (MEWA) Submit your Form M-1 to the IRS. Saturday, March 2, 2024 For Applicable Large Employers (ALE) Send Forms 1095-C to employees. For self-insured, non-ALE companies Send Forms 1095-B to employees. For companies with 250 or more employees in an industry covered by the recordkeeping regulation (or 20-249 employees in high risk industries) E-file your OSHA Summary of Illness and Injuries for 2023. Friday, March 15, 2024 Make refunds to participants for failed ADP/ACP tests(s), if applicable. As the plan sponsor, you must approve corrective action by your 401(k) provider by this date. Failure to meet this deadline could result in a 10% tax penalty for plan sponsors. For S-Corps and LLCs taxed as Partnerships Employer contributions (e.g., profit sharing, match, Safe Harbor) are due for deductibility. For S-Corps and Partnerships Deadline to establish a traditional (non-Safe Harbor) plan for the prior tax year, unless the tax deadline has been extended. Sunday, March 31, 2024 File Form 1099s electronically with the IRS. For companies with 100+ employees Submit your EEO-1 report. April Monday, April 1, 2024 Confirm initial Required Minimum Distributions (RMDs) were taken by participants who turned 73 before previous year-end, are retired/terminated, and have a balance. For companies in Maine with 5+ employees Deadline to comply with Maine’s retirement plan mandate. Tuesday, April 9, 2024 Report employees who participated in multiple plans that have excess deferrals (402(g) excess) to Betterment. Monday, April 15, 2024 Tax Day Deadline to complete corrective distributions for 402(g) excess deferrals. For C-Corps, LLCs taxed as C-Corps, or sole proprietorships Employer contributions (e.g., profit sharing, match, Safe Harbor) are due for deductibility. For C-Corps and Sole Props Deadline to establish a traditional (non-Safe Harbor) plan for the prior tax year, unless the tax deadline has been extended. Tuesday, April 30, 2024 File Form 941 (Employer’s Quarterly Federal Tax Return) with the IRS. May Wednesday, May 15, 2024 For non-profit companies Tax returns due June Sunday, June 30, 2024 Deadline for EACA plan refunds to participants for failed ADP/ACP tests(s). Failure to meet this deadline could result in a 10% tax penalty for plan sponsors. July Monday, July 1, 2024 Mid-Year Benefits Review: Remind employees to take advantage of any eligible voluntary benefits. Wednesday, July 31, 2024 If your plan was amended, this is the deadline to distribute Summary of Material Modifications (SMM) to participants. File Form 941 (Employer’s Quarterly Federal Tax Return) with the IRS. Electronically submit Form 5500 (and third-party audit, if applicable) OR request an extension (Form 5558). Betterment at Work prepares these forms on our plan sponsors’ behalf, with plan sponsors being responsible for filing them electronically. For self-insured companies Submit the PCORI fee to the IRS. August Thursday, Aug. 1, 2024 For NEW Betterment at Work 401(k) plans Deadline to sign a services agreement with Betterment at Work in order to establish a new Safe Harbor 401(k) plan for 2025. Deferrals must be started by Tuesday, Oct. 1, 2024. September Sunday, Sept. 15, 2024 For S-Corps and Partnerships Deadline to establish a traditional (non-Safe Harbor) plan for the prior tax year if the tax deadline has been extended. Monday, Sept. 30, 2024 Distribute Summary Annual Report (SAR) to your participants and beneficiaries. If a Form 5500 extension is filed, then the deadline to distribute is Sunday, Dec. 15, 2024. October Tuesday, Oct. 1, 2024 Deadline to establish a new Safe Harbor 401(k) plan. The plan must have deferrals for at least 3 months to be Safe Harbor for this plan year. Tuesday, Oct. 15, 2024 Electronically submit Form 5500 (and third-party audit if applicable) if granted a Form 5558 extension. Betterment at Work prepares these forms on our plan sponsors’ behalf, with plan sponsors being responsible for filing them electronically. For C-Corps and Sole Props Deadline to establish a traditional (non-Safe Harbor) plan for the prior tax year if the tax deadline has been extended. For companies that offer prescription drug coverage to Medicare-eligible employees Notify Medicare-eligible enrollees of creditable coverage for prescription drugs. Thursday, Oct. 31, 2024 File Form 941 (Employer’s Quarterly Federal Tax Return) with the IRS. November Friday, Nov. 1, 2024 Deadline to request an amendment to make a traditional plan a 3% Safe Harbor non-elective plan for the 2024 plan year. Amendment must be executed and sent by Sunday, December 1, 2024. Deadline to request an amendment to make a traditional plan a Safe Harbor match plan for the 2024 plan year. Amendment must be executed and sent by Sunday, December 1, 2024. December Sunday, Dec. 1, 2024 Betterment at Work prepares 2025 Annual Notices (see subullets below) and sends relevant notices to our plan sponsors for distributing to participants. Plan sponsors to disseminate paper copies if required. Deadline for plan sponsors to distribute notices (if applicable) to participants for 2025 plan year: Safe Harbor notice Qualified Default Investment Alternative (QDIA) notice Automatic Enrollment notice Deadline to execute amendment to make a traditional plan a 3% Safe Harbor nonelective plan for the 2024 plan year. Deadline to execute amendment to make a traditional plan a Safe Harbor match plan for the 2024 plan year. Sunday, Dec. 15, 2024 Distribute Summary Annual Report (SAR) to participants, if granted a Form 5558 extension. Tuesday, Dec. 31, 2024 Deadline to post required workplace notices in conspicuous locations. Deadline to execute amendment to make a traditional plan a 4% Safe Harbor nonelective plan for the 2023 plan year. Deadline to make Safe Harbor and other employer contributions for 2023 plan year. Deadline for annual Required Minimum Distributions (RMDs). For companies that failed ADP/ACP compliance testing Deadline to distribute ADP/ACP refunds for the prior year; a 10% excise will apply. Deadline to fund a QNEC for plans that failed ADP/ACP compliance testing. Remaining 2023 Deadlines Friday, Dec. 1, 2023 Betterment at Work prepares 2024 Annual Notices (listed below) and sends relevant notices to our plan sponsors for distributing to participants. Plan sponsors to disseminate paper copies if required. Deadline for plan sponsors to distribute notices (if applicable) to participants for 2024 plan year: Safe Harbor notice Qualified Default Investment Alternative (QDIA) notice Automatic Enrollment notice Deadline to execute amendment to make a traditional plan a 3% Safe Harbor nonelective plan for the 2023 plan year. Deadline to execute amendment to make a traditional plan a Safe Harbor match plan for the 2024 plan year. Friday, Dec. 15, 2023 Distribute Summary Annual Report (SAR) to participants, if granted a Form 5558 extension. Sunday, Dec. 31, 2023 Post required workplace notices in conspicuous locations. Deadline to execute amendment to make a traditional plan a 4% Safe Harbor nonelective plan for the 2022 plan year. Deadline to make Safe Harbor and other employer contributions for 2022 plan year. Deadline for annual Required Minimum Distributions (RMDs). For companies that failed ADP/ACP compliance testing Deadline to distribute ADP/ACP refunds for the prior year; a 10% excise will apply. Deadline to fund a QNEC for plans that failed ADP/ACP compliance testing.

The key factors holding back your employees’ retirement readiness Jan 3, 2024 10:56:07 AM And how the types of benefits you offer can help. Broadly speaking, the economy did alright in 2023. Inflation slowed, stocks rallied, and employment remained strong. But you wouldn’t know it by looking at the current mood of American workers. According to our latest annual survey of 1,000 full-time employees, their levels of financial wellness trended down in 2023 at the same time their financial anxiety climbed by seven percentage points. So what gives? We sifted through the data and saw several trendlines emerge. Explore them in full detail in our Retirement Readiness annual report – and keep reading below for a preview. Inflation’s ripple effect on retirement Inflation slowed significantly in 2023, but that’s not to say that all prices fell. The average American household spent $709 more per month in 2023 compared to 2021 on things like rent, groceries, and gas. Until wage growth catches back up to inflation, workers will continue to feel their paychecks pinched, and two casualties are taking shape as a result: Emergency funds: Although more than half (52%) of employees reported currently having an emergency fund, that’s a 7% drop from 2022, and 14% decrease from 2021. Retirement savings: A worrisome 3 in 10 workers tapped into retirement savings in the past year to pay for short-term expenses, a significant setback for their long-term goals. All of this has left workers feeling stressed. More than half (58%) went so far as to say the anxiety makes it hard for them to focus at work. But our research shows that some employer support and benefits can go a long way toward calming the waters. The growing role of financial benefits in retention If short-term expenses are depleting workers’ savings, it’s no surprise that a strong 401(k) and financial wellness benefits program remains at the top of workers’ wish lists. The importance of these benefits continues to grow as well, with 70% of workers saying financial wellness benefits are more important now than a year ago. A growing percentage of workers (60%) even say they’d be enticed to leave their job for better financial benefits. Student loan debt, however, continues to prevent the adoption of financial benefits for many. 64% of workers said student loan debt impacts their ability to save for retirement, and when asked why they don’t take advantage of their employer’s benefits, by far the most common reason was their paycheck simply won’t stretch that far. On this front, good news is just around the corner. Thanks to the SECURE 2.0 Act, employers will soon be able to offer a 401(k) match on their employees’ qualifying student loan payments, helping workers tackle two goals at once.

How your 401(k) plan can help boost employee financial wellness (and productivity) Dec 12, 2023 3:23:10 PM Financial stress is hurting productivity. Here’s how you can help change that at your business starting with your 401(k). Not only does financial stress make an individual’s personal life more difficult, it can hurt their employer's bottom line. As business leaders, we are in a position to make a positive impact on our employees’ lives and our business performance. Three different studies, one diagnosis Three national studies, including our own, found that financial stress negatively impacts work performance. PwC found that 60% of full-time employees are stressed about their finances and one in three full-time employees says that money worries have negatively impacted their productivity at work. Morgan Stanley found that 66% of employees agree that financial stress is negatively affecting their work and personal life. Our own study at Betterment at Work found that 46% of workers said that financial anxiety impacts their ability to work all or most of the time. The problem is clear but what do we do about it? The right benefits can help ease the pain When asked to rank potential financial wellness benefits that an employer could offer, employees ranked a 401(k) plan first followed by 401(k) matching contributions. These are some of the additional findings in our 2022 Betterment at Work Financial Wellness Barometer survey. If you offer a 401(k), it may be your core financial benefit but it isn’t the sole remedy. Our study also found that 93% of employees said it was at least somewhat important that their employer provides financial wellness benefits. Also, the demand for these benefits is increasing, with 68% saying financial wellness benefits are more important to them now than they were a year ago. It’s important to look at how you can build financial wellness features around your 401(k) plan to support your employees’ financial lives—and your business’s future. A comprehensive approach to wellness that starts with your 401(k) Knowing the needs of a modern workforce, at Betterment at Work, we’ve built a suite of financial benefits designed to support your employees, starting with your 401(k) plan. We believe that evolving your benefits with the needs of your workforce can help provide a strategic advantage in attracting and retaining talent. At our core is our modern 401(k) platform: Your 401(k) plan should be easy to manage for you and easy to use for your employees. Our technology streamlines this, whether via integrations with common payroll providers or through our intuitive platform that helps employees invest in diversified portfolios of generally low-cost ETFs. Enhancing your 401(k) plan: We’ve built additional benefits that integrate with our 401(k) platform to make managing benefits easier and reduce the financial stress that your employees carry. 529 Education Savings: Including 529s in your benefits package helps employees tackle rising education costs and shows your commitment to their financial health. It’s easy to manage, with 529s integrating into your existing benefits platform for a seamless experience. Financial Coaching: Help employees take better control of their finances with tailored 1:1 guidance and advice. Adding Financial Coaching to your Betterment 401(k) can help build a more confident, productive team. Plus, as a fiduciary, every financial advisor at Betterment is legally responsible to act in your employees' best interest.

How tax credits can make offering a 401(k) affordable Dec 12, 2023 3:13:11 PM See how new tax credits under the SECURE 2.0 Act could help with a new 401(k) plan’s implementation costs. After the passing of the SECURE 2.0 Act, CNBC published an article titled, “There may never be a better time to create a retirement plan.” The article largely focused on the increased tax credits smaller businesses can receive under the Act. These tax credits may amount to sizable savings for smaller employers looking to start a 401(k) plan. For that reason, we tend to agree with CNBC: this really may be the best time there has ever been to start a 401(k). What are the SECURE 401(k) tax credits? For businesses with 100 or fewer employees, there are three main tax credits to consider: Startup Tax Credit: Provides businesses with fewer than 100 employees a three-year tax credit for up to 50% of plan start-up costs. Increases the tax credit to up to 100% of the plan start-up costs for employers with 50 or fewer employees. The credit is based on the greater of $500 OR $250 per non-highly compensated employee (NHCE), capped at $5,000. Employer Contribution Credit: Offers a new tax credit to employers with 50 or fewer employees, encouraging direct contributions to employees, as much as $1,000 per participating employee with wages less than $100,000 (indexed annually). The credit covers the first five years of the plan allowing 100% of the employer contribution to be claimed in the first and second tax years, 75% in the third year, 50% in the fourth year, and 25% in the fifth year. The credit also applies to employers with 51-100 participants, but the amount of the credit is reduced by 2% per employee over 50 employees earning less than $100,000 per year. Automatic Enrollment Credit: Employers with new or established 401(k) plans that add automatic enrollment can take advantage of a $500 tax credit. Employers can claim this tax benefit for up to three tax years if they have 100 or fewer eligible employees. Sample scenario: Understanding the math To illustrate how tax credits can impact a business, consider the following hypothetical scenario for a business starting a new 401(k) with 25 participating NHCEs with wages less than $100,000 and a $3,000 average annual employer matching contribution per employee. Startup Tax Credit Employer Contribution Credit Automatic Enrollment Credit Total Credits Year 1 $5,000 ($250 per NHCE up to $5,000) $25,000 (100% or $1,000 max per employee) $500 ($500 per year) $30,500 Year 2 $5,000 ($250 per NHCE up to $5,000) $25,000 (100% or $1,000 max per employee) $500 ($500 per year) $30,500 Year 3 $5,000 ($250 per NHCE up to $5,000) $25,000 (75% or $1,000 max per employee) $500 ($500 per year) $30,500 Year 4 $0 (No credit) $25,000 (50% or $1,000 max per employee) $0 (No credit) $25,000 Year 5 $0 (No credit) $18,750 (25% or $1,000 max per employee) $0 (No credit) $18,750 Note: All information provided above is hypothetical for educational purposes only. For employers using the employer contribution tax credit, a tax deduction won't typically apply. Please review scenarios unique to your plan with your accountant to decide which tax credits and deductions are best for you. Three steps to make sure you get your tax credits Know the provisions: You’re already reading this, so you’re headed in the right direction. If you are considering starting a 401(k) plan, be sure to research both the tax credit and other SECURE 2.0 provisions. Know your plan: Whether you are starting a new plan or adding features to an established plan, to make the most of SECURE 2.0, you’ll need to review how your plan interacts with the law’s provisions and understand if your business is eligible. Talk to your tax adviser: Once you have a firm grasp of SECURE 2.0 provisions and how they impact your plan, reach out to your accountant and/or tax professional to plan for potential tax credits. They can walk you through your business’s situation and help you complete Form 8881.

How to implement 401(k) auto-escalation Dec 12, 2023 2:54:35 PM Historically, employers have had the choice to add automatic escalation to their 401(k) plans, but now SECURE 2.0 is requiring it to help people save. If you are faced with implementing automatic escalation, we've got you covered with advice on how to approach the change, and most importantly, how to communicate it to your employees. How SECURE 2.0 approaches automatic escalation Under SECURE 2.0, in addition to requiring automatic enrollment at a default rate between 3% and 10%, 401(k) plans are required to automatically escalate contributions at 1% per year to at least 10% (but no more than 15%). As always, employees can change their contribution rate or opt out of the plan at any time. Automatic escalation is a requirement for plans with an initial effective date on or after December 29, 2022. Businesses in existence for less than three years, as well as those with 10 or fewer employees, are exempt. The provision itself is effective on January 1, 2025. Consider this when setting your maximum escalation rate When you implement automatic escalation, you’ll need to decide your maximum rate, from 10% up to 15%. We like to think about automatic enrollment and automatic escalation together. Consider your default automatic enrollment rate when determining the limit to your escalation rate. For example, if you have a default enrollment rate of 8%, then a 15% escalation maximum rate might make sense, giving employees more room to grow their savings. Whereas a plan with a 3% default enrollment rate may want to consider a lower maximum escalation rate. Also, consider your employer match, if you offer one. Experts recommend saving 10-15% of income each year for retirement, and this includes the employer match. For example, if you are matching 5% and your automatic enrollment default rate is 8%, any employee who does not change their default rate is saving 13% of their income. Every company is different. It’s important to review different potential scenarios and keep in mind what your employees will respond best to when setting these default enrollment and escalation rates. Employee communications When it comes time to implement automatic escalation, how you communicate the change, along with any other plan changes, to your employees is incredibly important. If an employee doesn’t understand why the change is happening, they may fear it or be surprised to see an increased contribution if they were not expecting it. Instead, take the time to explain the purpose of automatic escalation. Consider this sample language when implementing the change with your employees: Recently, a new law was implemented called the SECURE 2.0 Act. Its purpose is to help Americans save more for retirement. Part of the Act that we’ll be adopting is called automatic escalation. Automatic escalation increases an employee’s contribution rate to their 401(k) plan by 1% each year until the contribution reaches [INSERT YOUR PERCENTAGE]. It’s designed to help everyone participating in our 401(k) to build retirement savings. Experts recommend saving 10-15% of your annual income for retirement and automatic escalation helps get closer to that amount without additional effort. But don’t worry: If you are not comfortable with the escalation, you have the option to change your contribution rate or opt out of the plan at any time. We’re excited about this change and are proud to continue to evolve our 401(k) program to make saving easier. Feel free to edit this language to fit your organization’s needs, including any mandatory communications. What’s most important is that your employees see automatic escalation as a positive change.