401(k) incentive to enroll?

Has anyone used an incentive plan to boost 401(k) enrollment? We are thinking of having a one month "sale" and anyone who joins the 401(k) for the first time would receive a prize (something like a $10 gift certificate). If it's successful we can do it again later in the year.

Just some background before you all think I've gone off the deep end. We have had a very difficult time with the non-discrim testing. OK, we fail every time. We have good participation at our corp office, which is, of course, where our highly comp'd reside, but we have 1000 employees in over 42 states and 250+ locations. We can't meet with the employees one on one, do meetings, etc. because of the geographic diversity of our employees. Can't do telecons or web demos either because 95% of our employees are on federal gov't sites and can't do company "work" while on the clock. So it's been very hard to reach those that aren't here locally. We mail them packages and flyers and pamphlets. Do paycheck stuffers and tons of information is on our employee internet site. But it's not working. Even put green "dollar bills" in paychecks with the words "FREE MONEY" on them and information on the 401(k).

So, since education isn't working we came up with the incentive idea. I know it seems like the $10 gift certificate is a pretty poor prize, but people go nuts over the silliest things sometimes. We thought it'd be worth it to at least try.

Your thoughts?


  • 11 Comments sorted by Votes Date Added
  • This is going to sound corny, but we used a "sock it away" campaign and gave away a new pair of gym socks when someone new enrolled. Honestly, we got a lot of good PR out of that one ..........plus a lot of chuckles....
  • We have a matching contribution and a profit sharing contribution. We match dollar for dollar up to 3% of total gross wages and we give every eligible employee a 3% profit sharing contribution every payday. Therefore, every eligible employee we have enrolls in the plan and receives at least 3% of their gross wages even if they decide to contribute nothing themselves. Because everyone gets at least 3% ,if we do not pass the HCE test we are very close to passing.
  • Dutch2 -
    We have a similar plan its called a "Safe Harbor" and we do not have to do the discrim testing. Because everyone who is eligible for the plan receives a contribution even if they are not participating by contributing themselves.


  • We've thought about the safe harbor plan but that's pretty costly. Our owner really wants to educate the employees, not just hand them over free money. He wants them to make an informed decision to enroll and to understand the 401(k) program. Yes, I know that's a tall order to fill and that 90% of our employees won't get it, but that's the goal.
  • I have run into a similar issue in the past. Other than lack of communication, is there anything else that would make employees not enroll, like $$?? I know it sounds ridiculous, but if you are making $10/hr, it seems impossible to "sock" any away.

    ~~"Sock it away" I LOVE IT!! :-))
  • I don't see anything wrong with the give-a-way, but I agree with the other poster who suggested that you emphasize your matching contributions. Perhaps you could infomr employees that by not investing in a 401(k) account they are throwing away free money - in terms of the company's match.

    I'd love to here other creative ways that other companies have encouraged employees to contribute to benefit accounts.

    Anne Williams
    Attorney Editor
    M. Lee Smith Publishers, LLC
  • We've emphasized the match until we're blue in the face.

    We've thought about negative enrollment but the owner of the company is against that - he doesn't want to force anyone to contribute.

    Yes, we do have quite a few lower paid employees ($10-$15/hr) and I know that is a factor. But I'd be happy if they contributed just 1% - that's the way it often starts, just by contributing 1%.

    So, we've sort of been stuck with the problem and haven't found any way to entice employees to enroll.

    Thanks for the suggestions - love the sock it away idea! :)
  • The best tool I have found for maximizing 401K participation is the Social (in)Security Administartion itself.

    Invite your ee's to visit SSA's website where they can enter info and get an estimate of what their benefits will be.......................Trust me, unless they like poverty, most will run to your office with mouse still in hand wanting to enroll.

    I have used cutsey-type themes in the past, however, I have found that a stone-cold approach has worked best.

  • dbutton111,

    Sorry, but if I'm an average Joe who's never been in a 401(k), brochures and flyers would never convince me. I wouldn't sign up unless you sat me down in a conference room, had someone explain it to me, and hand me the form.

    Since that's not possible for you, you might tell your boss that negative election may be your only solution. Here's an article about new flexibility for opt-out enrollment, such as linking automatic enrollment to raises:

    Good luck.

    James Sokolowski
  • Our company has a 'creative' approach. It's mandatory! Every employee is automatically enrolled in the plan and to opt out, it must be done either in writing or online, password protected. Very few opt out. No matter what you do, some horses won't drink.
  • There is an article on SHRM's website right now about mandatory enrollment unless one takes steps to opt out. We require a signature to either enroll or decline and even with a fairly small number at one location, it's a job to get signatures from decliners. I'd love to make it mandatory!

    But since I've already finished my last enrollment before retirement, I'll let my successor work on this one!

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