7 HR leaders weigh in on the state of the 401(k)

We wanted to gather their thoughts on the main vehicle for retirement savings, the 401(k), so we spoke with seven HR and finance leaders from industries ranging from marketing to transportation to healthcare. Some allowed us to use their names and others preferred to remain anonymous or change their names. Here’s what we learned.

Moving the needle on recruitment and retention

First, all viewed a competitive 401(k) or 403(b) package as a benefit that can move the needle on recruitment and retention. Declan, Vice President of Benefits and Retirement at a major hospital system called it “a very viable option”, adding, “I’m not sure what we’d replace it with.” Amy Arthur, SVP of Finance and Operations at LaunchSquad, a communications and marketing agency, said, “We’re happy and perhaps complacent. The fees are reasonable and our employees are getting a good return.”

Suffice to say, offering a competitive 401(k) package is seen as at the very least table stakes, but a costly one. On average, retirement packages represented about 20 - 25% of their overall benefits budget. And those budgets are not guaranteed. One leader’s organization had to make the difficult decision this year to scale back their employer match due to financial hardship.

Saving for retirement isn’t always prioritized by employees

Second, employees are not proactive about saving for retirement. Like this NYT piece describes, the 401(k) is a benefit taken advantage of most by high earners. That tracked across all seven organizations.

“We don’t want to be the parent, but at the same time we want to do our due diligence to make sure employees are thinking 40, 50 years down the road,” said Lisa, Executive Director of Compensation and Benefits at a mid-sized hospital system in the northeast.

The Secure 2.0 Act has eased this worry somewhat. As of 2025, organizations with more than 10 employees are required to passively enroll new hires in the company’s retirement savings plan. Still, it remains true that lower earners are more likely to opt out of or forgo their retirement savings, and higher earners are more likely to max out their annual savings.

Is the 401(k) a source of inequity?

“There is an inherent barrier for lower-income employees who need every dollar that the 401(k) doesn’t address,” said Casey Timorason, Head of Growth at Service Professionals Inc., an HVAC company based in New Jersey that’s part of Basic Capital’s pilot program for employers. “For them, it’s sort of, ‘Match whatever you want. I still don’t have anything extra to put in’.”

Noelle Domeniconi, a fractional HR leader who has implemented retirement benefits at a number of startups, felt similarly.

“There’s a lot surrounding the 401(k) that has to do with a lack of equity and accessibility that is a big limitation, especially in lower-income earners,” she said.

Balancing the scales through education

One way companies try to mitigate the imbalance in participation and tout the benefits is through education. Whether leaning on a third party, handling internally, or some combination, all organizations we spoke to offer some bank of resources to employees.

“A big piece of the success of a 401(k) is on the education the company offers,” said Michael Kellerman, Associate People Experience Director at FWD People, a strategic marketing agency based in Brooklyn. “It’s makes big huge difference to people to explain why it’s important and how it works.”

Those options ranged from benefits newsletters to email campaigns, webinars or 1:1 meetings with plan administrators. Some take it a step further and alter messaging based on the age of the employee. The issue, said Declan, is that targeting the right population can be hard, especially through written channels.

“From a comms perspective, we’re very email driven and people are overloaded on it so a lot gets missed,” he said. “If it’s buried in a newsletter somewhere, that’s not useful.”

He said there is a 1:1 option to speak with a financial advisor from their plan administrator as well, but was unsure of how utilized that was. Even when companies offer direct access or an easy-to-use app, though, the information provided can often feel overwhelming.

“When I look at the number the app says I need to be saving every month for retirement, you simply can’t get there,” said Bobby, Chief Human Resource Officer of a transportation company in the northeast. “And we’re in a household with two decent incomes. So how the heck is 70 or 80% of the population going to be able to save what the advisors recommend? It’s a huge worry, especially with the aging population in the States.”

Loans against 401(k)s

Another factor impacting retirement savings in recent years has been rising prices that are causing people to borrow more readily from their 401(k). This comes at the same time sports betting is being legalized in more states, which is also draining retirement balances.

“I’ve never seen as many loans as I've seen recently,” said Noelle. “There are penalties and I think a con of a 401(k) is the fact that it’s illiquid until a certain age. Sometimes people need to access their savings.”

The Secure 2.0 Act has also eased the restrictions on borrowing, and made it easier to borrow for personal hardship. But the penalties still apply. It’s something the Declan is keeping a close eye on to determine whether they need to do more education on it.

All seven leaders acknowledged that the 401(k) as a vehicle for retirement savings hasn’t changed much in the past four decades. Some expressed a desire to evolve their 401(k) offerings to meet the demands of their workforce. The two healthcare leaders are both exploring options that will allow employer contributions to 401(k)s to be redirected to an employee’s student loans. Bobby explored Robinhood’s 401(k) match program, but he ultimately felt it was too risky and not as established as the major players like Fidelity.

“A lot goes into designing the right retirement package,” said Bobby. “It takes a lot of brain power, financial balancing for the business, working out what's the right value proposition, what's the cost impact, using the right industry expert advisors and administrators and being able to manage a ton of data.”

Looking to the future

As much as the 401(k) can seem like the only game in town, there are alternatives. Michael cited 529 plans, Roth IRAs or student loan repayment. Still, none have the brand of the 401(k).

“A 401(k) is always going to be something, and probably needs to be,” said Michael. “I wish there was a better pension or retirement plan, but for now I think the 410(k) is here to stay.”

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