A 401k plan is only as good as the participants who contribute to it. But unless your employees fully understand the plan, its procedures, and its ramifications on their money, they aren't going to trust you or the employee retirement plan enough to take advantage of it.

You've got to communicate with and educate your employees if you want the program to see any measure of success.

Preparation

Provide all the resources you can to make sure employees can access whatever information they need about the plan. Employee retirement plan providers are required to provide such information; take advantage of videos, presentations, or printed material.

In addition, take the time to hold structured, interactive meetings that encourage questions. (Or if budget permits, one-on-one sessions are ideal.) Be prepared to address the following:

• Will the company match contributions?
• What about profit-sharing?
• In what ways can the investment be distributed?
• Can employees get loans from their investment?
• Is a hardship withdrawal available? What is the penalty for this, if any?
• What happens when employees are terminated?
• How can they roll over their funds?

The goal with interactive training is educating the employees. It should be a back-and-forth process, not just a handoff of information.

Administration

Once the employee retirement plan is established, hold an enrollment meeting to iron out initial procedures and address concerns.

In addition:

• Make sure employees can always have access to their balances and other information on their investments, and let them know how they can do it.
• Offer other resources. Although employers legally aren't allowed to offer advice on 401k investment, you can point them in the direction of other resources to turn to, both in print and online.
• Continue to measure results. Make use of suggestion boxes and user surveys to take the overall temperature of the plan and gauge how the employees feel about it. Periodically check the data for increases in participation or contribution. If anything spurred these increases, pay attention to these incidents.

The bottom line is that the more informed employees are, the more comfortable they will be with employee retirement plans. That usually translates to higher contributions, which is a winning situation for all.