401(k) Benefits Are the Red Headed Step Child of Your Total Rewards Program

Comparing Your 401(k) Plan: How Does it Stack Up Against the Top 30 Plans

Last night as I was sitting here doing my taxes I was pondering employee benefit plans and programs including the 401(k). I know, I’m weird like that. It’s one of those things that I do. Often forgotten by younger employees, it is an important benefit that serves your workforce in the long term. At the heart of any benefits package is a 401(k) plan. I’m not going to lie, there was a day when I couldn’t have cared less about a 401(k) plan. In fact, when I started my career, the only part of my benefits package I really cared about was how much I would be getting back from my benefits allowance. I chose the least expensive elements and pocketed the rest – it was a good system. But like most people come to realize at some point in their twenties, a 401(k) is vital. It’s a big deal. Like huge. Catch my drift?

401 (k) benefit programs are the red headed step child of your corporate total rewards program. They are important and necessary but often overshadowed by employee benefits perks such as Google’s death benefit package and unlimited vacation plans. It’s time 401(k) and those red heads get your respect and their due.

What Makes a Great 401(k) Benefit Program?

Whether you’re an employer, a job seeker or an employee, it’s nice to know how your 401(k) compares to the rest. Below, we look at the five major characteristics of BrightScope’s top 30 401(k) plans. How does yours stack up?

1. High participation rates
High participation rates are generally thought of as the key to providing a successful retirement plan. The more employees contribute, the more funds there are to invest. According to “Businessweek,” most companies have an average of 80 percent of employees enrolled in their retirement plans, though the average of companies on BrightScope’s list average 93.5 percent participation. They’re the best for a reason!

This average has increased in recent years due to the fact that many companies auto-enroll employees and then give the option to opt-out. While you may not know the participation rate of your company’s plan, a company that auto-enrolls likely has pretty high participation rates.

2. Employer contributions
Employer contributions are important for two reasons: they encourage employee participation and they boost your 401(k)’s growth. Think your employer is pretty generous? The number one plan on BrightScope’s list contributes an average of $23,000 annually per participant! Jealous much?

3. Low fees
401(k)’s are one of the easiest investments you can make but they can be costly. When your employer offers a 401(k) retirement plan, they also take on the responsibility of complying with laws that mutual funds and other investments aren’t subject to, which means they’re paying someone to oversee these administrative tasks. The unfortunate thing is that these often get passed on to employees. The best 401(k) plans offer low fees, usually because the company pays a lot of the costs.

4. Immediate plan eligibility
More and more companies are offering immediate plan eligibility to their employees. This means that as soon as an employee is hired, he or she is eligible to enroll is the company’s retirement plan. Eligibility periods can be based on length of service or amount of hours but can be prohibitive to a great retirement plan for your company.

5. Immediate vesting
Any contributions made to your 401(k) are yours to keep but your employer’s contributions may not be. Depending on your company’s vesting policy, you may vest immediately, after two years or even after seven years. Since most employees only stay at a company an average of four to five years, and many stay far less than that, it’s pretty clear why this is an important component of a great 401(k) plan.

Total Rewards Program

How does your organization stack up when offering 401 (k) program benefits? Are they an important part of your total rewards program? For those of us in mid or late stream of our careers seeing the horizons of retirement, how important is a 401(k) program and does yours live up the hype?

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Jessica Miller-Merrell

Learn more about Jessica Miller-Merrell, SPHR, SHRM-SCP, the founder of Workology, a workplace HR resource, and the host of the Workology Podcast. More of her blogs can be found here.

Reader Interactions


  1. AFA Julie says

    One problem we struggle with at American Fidelity is getting people to contribute to their 401(k) because we also offer a pension program. Colleagues are automatically enrolled in the pension plan and don’t have to contribute, which is a HUGE perk. The downside is they then think they don’t need to contribute to their 401(k). We’re working on making some adjustments to our communications so hopefully more Colleagues take advantage of the program. I’d love to hear how other companies get younger employees to care.

  2. Sarah says

    I am not officially representing Symetra, but I really love and appreciate our company’s 401k program. Our new employees are eligible and vested on day 1 – that’s huge! The company matches 100% (up to 6%) and they cover any admin fees. I know I participate, but I wasn’t sure how many of my peers did… I checked the number today and we’re at approximately 90% participation! I’m thrilled to hear so many people are taking advantage of this benefit and am proud that our company met these characteristics!

    • Jessica Miller-Merrell says

      Hi Sarah,

      Thank you for commenting here (unofficially). Seriously sounds like a top plan with good benefits to drive participation. I appreciate you sharing. I’ve receive numerous private comments from people who are looking for ways to increase their participation numbers. Your insights are fantastic!


  3. Stacey says

    I have an opinion, for what it’s worth many don’t share my opinions. Haha so use it at your own risk. When I started with a division of Wells Fargo “unnamed” our 401k matched 250% of our 6% maximum with enrollment period of 90 days and 4 year vestment. I stacked up my 401k big time, but found very few others did.
    My current employer is typical at 1:1 at 6% with 4 year vesting period. But our participation rate is much higher. I feel this is because
    1) they do a great job educating us from the top down with numbers. Show everyone the difference between starting now with a small amount and where it will end vs starting later in life. Using numbers is key
    2) hr representative sits with each new employee to help fill out new hire papers and explain how important our benefits are from day one. If they don’t get us to enroll right away, chances are the new employee will never enroll because we get used to our new income.




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