What About The Employer Match?



 Most companies can’t give employees the kind of stock options Tesla does, but even a modest 401(k) employer match makes a big difference—for the employees and the company too.

The Scoop At Tesla

Tesla does offer a 401(k) plan, with over 40,000 active participants. They maintain average account balances of $17,000. Total plan assets are about $633 million and the plan fees received an “average” rating. Tesla’s recent Form 10-K filings revealed that the company has not made contributions to the 401(k) plan in 2018, 2019, or 2020. However, as reported by Electrek:

Tesla is offering stock options and grants as part of its compensation packages. But unlike most automakers, the company is offering stock compensations for all employees throughout the organization, including production associates and sales staff, which is rare in the auto industry.

With the recent major increase in stock price (more than 200% this year alone), Tesla stocks are creating a bunch of new Tesla millionaires.” 

Of course, there is no guarantee that Tesla stock will continue rising—and it could drop. That’s why, as 401k Specialist reports, Elon Musk sent this email to all employees:

At a time like this, when our stock is reaching new highs, it may seem as though spending carefully is not as important. This is definitely not true.

When looking at our actual profitability, it is very low at around 1% for the past year. Investors are giving us a lot of credit for future profits, but if, at any point, they conclude thats not going to happen, our stock will immediately get crushed like a soufflé under a sledgehammer!”

Regular Retirement Savings: No Souffle or Sledgehammer Needed

It’s always interesting to know what’s going on at other companies—while trying our best in our own. Lots of data points out how important offering a 401(k) plan is to employees—and even more so when the company can include a match. In fact, retirement plans turn out not just to be important for employees—they are important for the company too. As Business News Daily sums up:

There are many major benefits in offering retirement benefits to your employees, from increasing productivity to attracting new talent. An employee retirement plan can be the backbone of your benefits package and an essential ingredient of a positive company culture that increases employees’ general well-being.

 Zenefits reminds employers that there are tax deductions associated with administering benefit plans and matching employee contributions. Additionally, some companies are using contributions to incentivize performance:

 Many organizations tie their contributions to specific goals, and when employees meet these benchmarks they are rewarded by increases in their 401k contribution. Depending on how you choose to structure your benefits program, they can be used to incentivize performance, which ultimately helps the company succeed.

Next Steps

As a plan sponsor, in addition to strategizing about how the company could begin or increase matching contributions, remember, other actions to increase savings include: enabling automatic enrollment in the retirement plan; expediting part-time worker participation; and, providing “catch-up contribution” opportunities for employees 60 and older.

As you continue doing everything you can to encourage employee retirement saving, don’t forget to protect the hard earned savings in the retirement plan! Be sure that your required ERISA fidelity bond is up to date—and properly covers your plan. Let Colonial Surety Company make it easy for you with our user-friendly, digital and direct service. You can easily and quickly purchase your bonds and related insurance coverage online.

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