Top 7 401(k) questions employees may have

At the start of a new year, lots of folks are thinking about resolutions.

And, if they’re also thinking about saving for retirement, they may have realized they don’t know all that they should about their retirement plan—or they may simply have decided that they need to know more.

If that’s the case, they’ll have questions about their 401(k) plans.

And regardless of what kind of 401(k) education you or your plan provider may furnish, you’ll likely be hit with inquiries about various aspects of the company plan.

Here are the top 7 questions you may get from workers this year.

7. How do I manage my investments?

Employees will want to know whether there are online tools to track investments, access statements and change their portfolio holdings.

They’ll also want to know about educational resources, whether online or in group or individual sessions, so that they can do the best they can. If you don’t already offer access to a financial advisor to help them better understand what they need to do, this could be a potential plan upgrade—particularly since many people prefer interacting with a human being to relying on online tools, especially for educational purposes.

6. What kind of investments are available?

Particularly if they’re trying to educate themselves better on how to make their 401(k) investments perform at peak efficiency, employees will want to know what they’re putting their money into.

Which mutual funds does the plan use? What other options are available? Are there alternative investments in the plan? Managed accounts? Bonds? Individual stocks? Money market funds? Are there plenty of options available, so that the portfolio is sufficiently diversified?

And if they don’t like the sound of the 401(k)’s options, they might ask you about providing a Roth 401(k) instead.

5. How high are the fees—and can they be lowered?

Savvy employees will be concerned about the fees involved in the various investments in the plan. Even more savvy ones might push you to consider lower-fee investments, such as Class R6 shares rather than Class A and target-date funds, which have preset portfolios and should be cheaper.

They’ll probably also ask about the presence or absence of index funds, and question whether the plan provider engages in revenue sharing or provides institutional pricing on all funds.

4. When and how can I withdraw money from the plan?

In case of emergency—a death in the family, a serious illness or perhaps a less depressing need, such as a home purchase or the kids’ college education—employees might need to get their hands on some of their 401(k) funds. Does your plan allow that?

And if so, how? Is it a difficult process? Are only hardship loans allowed? How long does it take to get the money? Can employees continue to contribute to the plan after they take a withdrawal?

3. What’s the employer matching contribution?

Employees will want to know, if they don’t already, how much you’re going to kick in in matching funds when they start contributing to the plan.

Do you match 50 cents, for instance, per dollar up to a certain percentage of the employee’s salary? Say, 3 percent or 6 percent? Or do you do a dollar-for-dollar match up to whatever your limit is? Or perhaps you have a dollar limit rather than a percentage.

2. When am I vested?

Employees—particularly millennials, who tend to move from job to job with increasing frequency—will probably want to know how quickly they’ll be able to keep any employer contributions.

They probably already know that whatever they themselves contribute to a plan is theirs to take whenever they leave for a new job, but since vesting rules can vary widely from company to company, they’ll want to know whether employer contributions vest at 5, 10, 25 or 50 percent per year, or at 100 percent after a certain number of years.

1. What are the eligibility requirements?

New employees in particular will want to find out about this, but existing employees who perhaps hadn’t signed up in the past may also be checking on whether they work enough hours per week (for part-timers) or have been with the company long enough to start contributing.

Make sure that employees know what’s required for them to be able to participate—and if you don’t already have it, you might want to consider adding auto enrollment as a feature next time you modify the plan.