Employer-Sponsored Retirement Plans: Creating a Path Toward Financial Security

Daniel Tatomir

June 15, 2025

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Americans’ 401(k) balances continue to increase year over year, and a recent study by Fidelity highlights this trend, revealing a record number of 401(k) and IRA millionaires on its platform. This increase in wealth is certainly influenced by market growth and its impact on plan balances, but looking deeper at Fidelity’s report shows that the average 401(k) millionaire has been contributing to their account for 25.7 years.1

This data serves as a strong reminder that building substantial retirement savings is not about chasing short-term gains or making speculative bets on hot stocks and IPOs. While the allure of quick profits may be tempting, Fidelity’s study underscores the power of disciplined, long-term saving and investing. The key to accumulating significant wealth in retirement accounts lies in consistent contributions and the ability to stay invested through market fluctuations. Fidelity’s report is instructive for both employers and employees.

Accredited By:

Daniel Tatomir
Vice President Retirement Plan Services & Business Exit Advisor
Daniel Tatomir
CExP®, AIF®

Dan brings more than 25 years of industry experience helping organizations design and manage effective retirement plans. Dan specializes in employer-sponsored retirement plans for private companies and nonprofit organizations, partnering with plan sponsors to align plan design, provider selection, and investment oversight with the organization’s goals and fiduciary responsibilities. Working closely with Fragasso’s portfolio management […]

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This article has been reviewed for accuracy by Fragasso's leadership team and accredited by Daniel Tatomir to help ensure the information reflects current financial planning and wealth management principles.

From an EMPLOYEE’s Perspective:

We’ve most likely all heard the benefits and advantages of participating in a retirement plan, but they bear repeating:

Forced Discipline — Payroll deductions make saving automatic, helping you stay consistent with retirement contributions.

Tax Benefits — Pre-tax and Roth contributions offer the potential of lower taxes, the difference is when you enjoy the tax benefit, when you save (Pre-tax) or in retirement (Roth).

Employer Matching — Many employers offer matching contributions, essentially providing free money to employees who participate in the plan.

Compound Growth — Over time, reinvested earnings and consistent contributions help accounts grow exponentially, especially when started early.

From an EMPLOYER’s Perspective:

The design and administration of a retirement plan are crucial in helping employees save for their retirement goals. Implementing proven strategies can significantly boost employee participation and savings, such as:

Automatic Enrollment and Escalation — Automatically enrolling employees in the plan and gradually increasing contributions over time is a powerful way to enhance participation and account balances.

Employer Matching Contributions — Offering an employer match is a generous benefit. Structuring it to encourage higher employee savings can better position participants for long-term financial success.

Communication and Education — Regular reminders about the plan’s benefits, along with educational meetings and one-on-one financial counseling, can help employees better understand retirement savings and make informed decisions.

Important New Plan Addition for 2025:

The Secure Act 2.0, signed into law at the end of 2022, introduced numerous changes to retirement plans, with its provisions phased in over several years. A key update taking effect in 2025 is the enhanced catch-up contribution for individuals aged 60 to 63, increasing the savings limit from $7,500 to $11,250. Those interested in taking advantage of this benefit should verify that their retirement plan includes this provision.

Secure Your Financial Future

No matter your savings goal, Fidelity’s data underscores the importance of consistent saving. Whether you’re just starting your career or nearing retirement, it’s never too late to make smart financial decisions. Maximize your employer-sponsored plan today to help secure a stronger financial future.

Business owners looking to enhance employee participation and maximize the benefits of their retirement plan are encouraged to reach out to us. We welcome the opportunity to review your plan and explore ways to improve its effectiveness.

Reach out to us!

Sources:
1. https://www.fidelity.com/about-fidelity/Q2-2024-retirement-analysis

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Frequently Asked Questions About Employer-Sponsored Retirement Plans

What are the main types of employer-sponsored retirement plans?

The most common employer-sponsored plans include 401(k), 403(b), SIMPLE IRA, and SEP IRA. Each plan type offers tax advantages and varying contribution rules depending on the type of employer, business size, and employee eligibility.

How can employees maximize the benefits of their employer’s retirement plan?

Employees can maximize benefits by contributing enough to receive the full employer match, choosing investments that align with their risk tolerance and timeline, and regularly reviewing their plan to adjust for changes in income or goals.

Are employer-sponsored plans better than individual retirement accounts (IRAs)?

Employer-sponsored plans often have higher contribution limits and offer matching contributions, which can significantly enhance long-term growth. However, IRAs may provide more flexibility in investment choices and can complement an employer plan.

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