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Costs and Contributions
Employers should be aware of all the above features in different plans. Yet it appears that the only single element employees deeply care about is the level of employer contribution. The most common employer 401(k) match is 50 cents per dollar, according to Hewitt, but 19 percent provide a dollar per dollar match, up 5 percent since 1997. Hewitt also finds participation rates in plans with matching or discretionary employer contributions "are higher on average than plans where there is no employer contribution, and that all other key features and characteristics "appear to have little influence on participation rates."
Aside from participation levels, how can an employer assess how satisfied its employees are with its 401(k)? The simple answer is to ask the HR department, which will be the first place to hear complaints. By considering all the main elements - investment choices, servicing, information and costs - employers should be able to select a plan that offers the benefits of balanced, long-term investing.
Vanessa Drucker is a New York-based business writer.