Alondra Carbajal of Pacific BMW
Los Angeles, CA
I had the opportunity to establish a 401(k) plan from the ground up at my current company, making me the ultimate 401(k) champion. When creating the plan, we tried to make it as easy as possible for employees to participate in an effort to help them kick start or continue their retirement planning. As our plan closes in on its second year, I have found myself becoming an advocate for our 401(k) plan and improving my presentation of the plan. As an 18-year-old, I was in the shoes of many of our employees who feel confused, overwhelmed or simply too young to worry about retirement. In that mental state, it is too easy to dismiss the importance of it and difficult to fully comprehend that not participating in the plan genuinely does mean you are leaving money on the table. I had an amazing manager at my first job who explained the benefits of the plan so well, that it was an easy decision to enroll. I now aim to be as good an advocate for our 401(k) plan as she was for the plan at my previous employer. When advising co-workers, it is critical to relate to them and their financial goals. Many people have goals such as owning a house. It’s important to explain that while 401(k)s should not be treated as traditional savings accounts, some plans do offer hardship withdrawals that may allow them to cash out a portion of their savings to buy their first home. I have found that this benefit calms the anxiety of those who feel they can not contribute to a 401(k) plan because it will take funds away from other financial goals they may have. It’s also key to explain the different tax benefits offered by the 401(k) plan and include the Roth 401(k) if available. For young employees, who plan to increase their income in the future, the benefits of tax-free gains available through Roth 401(k) accounts is enticing if explained thoroughly and correctly. Overall, it is most important to explain to co-workers that saving any amount into a 401(k) is better than opting out. Using the employer match is critical when advising employees. As a 401(k) champion, you need to make retirement a reality for others and get them to understand that the earlier you plan for it, the less daunting it will be.