Many of you have asked why all employees need to be enrolled in the UU Org Retirement Plan, especially those that work very part time. We understand this may not make sense given our current cultural understanding of who is entitled to receive employer benefits. Perhaps you see this requirement as an additional burden on the organization.
We apologize if you have found it difficult to get all employees enrolled, but we cannot apologize for trying to extend this benefit to typically overlooked and underserved employee groups. Back in 2014, the UUA in their effort to help spread the access of economic well-being beyond the typically privileged in our own eco-system, took the bold step of deciding that this benefit would be available to ALL employees of our participating employers, not just the ones lucky enough to have a full time job. Our congregations are full of staff members who are part of the "gig economy" and will never qualify for traditional benefit programs in the wider world. We aim to be different.
Did you know that a frightening large number of Americans reach retirement age without any retirement savings? Did you also know that the way people who successfully build wealth and retirement savings in America do so using employer sponsored retirement plans such as ours?
Having access to an employer sponsored plan is a big deal. The fact that you can be employed at any of our participating employers in any role and have access to the employer sponsored plan is what it means to extend opportunity to the underserved.
All employees, regardless if they have satisfied the Year of Eligibility Service (YOES) or not are eligible to make pretax employee elective contributions in the Plan via payroll deduction (aka salary deferrals). This matters because:
- Employer sponsored plans have higher contribution limits than IRAs. For 2023, the contribution limit for 401(k) plans is $22,500 (or $30,000 if age 50 or older), while the IRA contribution limit is $6,500 (or $7,500 if age 50 or older). This allows for larger tax-deferred savings.
- Contributing via payroll deduction makes it easier for employees to automate their giving and take advantage of dollar-cost averaging.
- Employer sponsored plans generally have lower fund fees.
- All employees have access to the Empower platform and the financial planning tools and advisers, even if they have no contributions.
We know that alot of these very part time employees will not take advantage of the Plan, but we have no way of knowing in advance what someone's economic needs and desires are. Our goal is to provide them with the access and the opportunity along with any financial education they may need or want and then let them decide what is best for them.
Finally, because we are a multiple employer plan, we have to monitor employee participation across employers. The only way to do that is if everyone is enrolled and everyone's hours are entered each remittance period. A growing number of our employees are working for more than one employer in the Plan at a time and their hours worked across employers count towards satisfying the YOES. We will never know who these employees will be in advance so the best practice is to enroll everyone, give them the opportunity to make a salary deferral, enter their hours and remit any contributions they may have each remittance period, and let the system work.