Understand the pros, cons, and considerations for moving forward

It started with a simple question during a leadership meeting:

“What’s in our 401(k) plan—and are plan provisions still working for our team the way they should?”

The CEO glanced around the room. No one had a clear answer. The plan had been in place for years, maybe even decades. It quietly ran in the background while the company grew. 

But things had changed. New hires were asking about Roth options. Long-time employees were thinking about their retirement. And recent headlines about SECURE Act 2.0 raised more questions. And if the plan is out of sync, they could be out of compliance, or worse, lose employee confidence.

It was clear the time had come to take a closer look.

This scenario is playing out in boardrooms across the country. Retirement plans—once seen as “set it and forget it”—are now in the spotlight. The rules are changing. Your teams are evolving. And there’s a bigger focus on individual financial wellness. 

We’re hearing loud and clear an important question: Is our plan still a good fit? And we’re here to help answer that with you.

A deeper look into plan provisions

You’re the leader, or plan fiduciary, and it’s important to understand your plan provisions and what updates can help your employees and organization’s financial future and sustainability. 

Today’s 401(k) plans offer more options than ever before. Features like automatic enrollment, student loan matching, and Roth conversions are gaining attention. But the slew of new should be carefully considered, as each plan provision brings unique pros, cons, and considerations.

That conversation and benefit exploration  is a team specialty at HFM. Let’s take a closer look at the options shaping modern retirement plans and how you can evaluate the right ones for your workforce.

1.       Automatic enrollment and escalation

•         PRO: Automatic enrollment helps new employees start saving immediately, boosting participation rates. Automatic escalation slowly increases contribution rates over time. Both help employees save more without requiring them to take action.
•         CON: Higher participation may lead to increased employer match costs. Some employees may opt out if not fully educated on the benefits.
•         CONSIDERATION: SECURE Act 2.0 mandates auto-enrollment (starting at 3% and escalating annually by 1% up to 10-15%) for most new 401(k) plans beginning in 2025. 

• ACTION: Now is a good time to evaluate if your current plan includes this feature or if it should. Unsure? Give us a call. HERE 

2.        After-tax contributions and Roth conversions

•         PRO: Allows high earners to save beyond the traditional deferral limits. After-tax contributions can be converted to Roth at a later time, offering potential tax-free growth.
•         CON: Adds administrative complexity and may confuse employees, especially if they are unfamiliar with the nuances of after-tax vs. Roth.
•         CONSIDERATION: If your team values tax flexibility, these plan provisions may be worth adding. They’re especially helpful for high earners or younger employees focused on long-term growth.

• ACTION: Book a review session with your Plan Partner (Tyler / Caitlin / Other) to discuss your options and approach. HERE

3.        Student loan matching

•         PRO: Helps younger employees balance debt repayment and retirement savings. It allows employers to “match” student loan payments with 401(k) contributions.
•         CON: Requires coordination with payroll and recordkeeping systems. Employees without student loans do not benefit.
•         CONSIDERATION: Supports financial wellness and may improve recruitment and retention with younger workforces.

• ACTION: Interested in running the numbers to see the value for your employees? Let’s talk Book HERE

4.       Higher catch-up contributions

•         PRO: Employees ages 60–63 can contribute $11,250 for 2025 boosting retirement savings late in their careers.
•         CON: May disproportionately benefit higher earners unless paired with education and communication.
•         CONSIDERATION: Sponsors should confirm that their payroll provider and recordkeeper can support this provision. They should also make sure that older employees understand how it works and why it matters.

• ACTION: If you have an older workforce and want to explore this option, we’re here to talk it through.  Book a session with your Plan Partner here HERE

5.       Plan portability and auto-rollovers

•         PRO: New rules streamline small account ($1,000 – $7,000) rollovers and auto-portability between employers. Keeps participant balances consolidated and helps improve retirement outcomes.
•         CON: Requires coordination with recordkeepers and third-party portability solutions.
•         CONSIDERATION: Plans with high turnover or seasonal workforces can benefit from this feature. It helps reduce administrative burden by removing small, inactive account balances.

• ACTION: If your teams are changing regularly, let’s talk. Book HERE

Changing plan provisions: what to know

Before you make the changes, it’s important to understand the process. And we can help you take each step:

•         Amending the Plan Document – Formal plan amendments must be adopted in writing.
•         Communicating with participants – A summary plan description (SPD) or summary of material modifications (SMM) must be provided.
•         Effective date – Many SECURE 2.0 provisions can be implemented now, but several have default effective dates of January 1, 2026.

Now is the time to review your plan

Is it time to change your plan? Maybe. 

Is it time to check? Yes.

Today’s workforce expects more, and the retirement plan you offer plays a key role in your total compensation package. Thoughtful plan provisions help address important business goals, like recruitment, retention, and personal ones like long-term financial wellness. 

Reviewing your plan can help you stay ahead of regulatory changes and evolving employee needs. Plus, it helps demonstrate your commitment to supporting employees at every stage of life. 

A modernized plan isn’t just a benefit; it’s a reflection of your company’s values.

Quick checklist for plan sponsors

Have you reviewed your plan provisions in the last 12 months?

•  Are you prepared for January 1, 2026 SECURE 2.0 changes?

• Do your plan features match your workforce demographics?

• Have you documented your fiduciary decision-making?

• Have you talked to your HFM Advisor?

If not—now’s a great time to start.

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About Your New Jersey Retirement Advisors  

We believe that everyone should have the tools and resources necessary to build retirement wealth successfully. At HFM Investment Advisors, we are focused on:

•       Offering fiduciary training and defending against plan risks.
•       Empowering your employees to save and better prepare for their future.
•       Building effective retirement plans and investment strategies tailored to your specific goals.

As your 401(k) specialists, we take the time to understand your goals and are not afraid to dedicate the time, energy and resources needed to exceed your expectations. Talk to a 401(k) Expert.

 

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HFM Investment Advisors, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. All investments involve risk and are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as a recommendation appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment advisor to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.

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