The road to successful 401(k) retirement savings is full of potholes and obstacles. Myths abound: They’re not the right vehicle to replace outdated pensions and they can’t compete with other options, like IRAs.


Employers and plan sponsors need to “actively work to dispel these myths, which can potentially prevent participants from achieving their desired retirement outcomes,” wrote Spencer Williams for Employee Benefit News.


Here are three 401(k) issues they can tackle.


1.) The problem: Employees Simply Don’t Know Enough

Employees might be leaving free money, in the form of an employer match, on the table. Or, they don’t understand the benefits of a 401(k) compared to an IRA or the value of popular options like target-date funds.


The Solution:

Auto-enrolling workers at higher levels, encouraging employee financial literacy, and providing the expertise of an advisor who specializes in 401(k)s can all help. “As these plans continue to become more complex, it is vital to have investment advisors who spend 100 percent of their time working with them,” wrote Robert C. Lawton for Employee Benefit News. “These advisors do a much better job of making things simple for employers and plan participants.”


Employers might also consider hosting active enrollments each year, which could encourage employees to take a closer look at their choices and decisions.


2.) The Problem: Cashing Out Early

“Forty-three percent of workers took a cash distribution when they ended employment,” according to Employee Benefit News, which cited Aon Hewitt research. “Because of the power of compounding, those workers could potentially be missing out on big savings over time.”


The solution:

“Some sponsors and record-keepers offer roll-in assistance and cover all or part of the cost,” Williams wrote. “In fact, a 2015 Boston Research Technologies study of mobile workforce behaviors found that 62 percent of participants who had completed a roll-in did so with outside help.”



3.) The problem: Employees Not Saving Enough

“There’s a perpetual pundit debate over the best way to provide for retirement,” wrote Megan McArdle for Employee Benefit News. A common thread: Employees and employers aren’t saving enough.


The Solution:

“Slap a 10 percent to 15 percent surcharge on a worker’s wage income, and divert that money into the system for the worker’s future use,” McArdle wrote.

While this isn’t necessarily a realistic solution, advisors and employers should work together to emphasize the importance of increasing contributions.

“The 401(k) was not the miracle cure for our retirement problems … but it wasn’t a mistake, either,” McArdle wrote. “The important mistake was deciding that we could spend our first 25 years in school, and our last 25 years in retirement, without cutting our consumption in between.”