Jargon, Complexity and the 401k

Apr 23, 2026

Unfortunately, lots of employees remain perplexed by the communications associated with 401k plans. Despite public and private efforts to increase access to retirement plans, workers are not always sure how to respond after receiving information about their savings options and the services offered by the plan. What’s a plan sponsor to do? Clear communication, and tailored solutions can go a long way. Read on for tips to help employees maximize the opportunities the 401k provides.

Communication Gaps

Many employers, including small business owners have been expanding benefits, and putting more emphasis on retirement security. Nonetheless, workers “remain uncertain about their financial future,” because, as 401k Specialist explains, “a lack of clear communication is limiting employee confidence.”

Summing up the sixth annual Voice of the American Workplace Survey conducted by Franklin Templeton, Brian Anderson reports: “The survey found 88% of workers want benefits explained in plain language, and 53% feel overwhelmed by benefit choices. The disconnect is not priorities, rather it is communication. When benefits are too complex or technical, employees struggle to act on them.” Interestingly, 68% of the employers participating in the recent Voice of the American Workplace survey also said that benefits were becoming more complex, and 88% prioritize reducing employee financial stress. Franklin Templeton executive, Steve McKay, describes current dynamics this way: “What this research shows is not a lack of effort, but a lack of clarity … .Employers are investing more than ever but employees need simpler, more actionable guidance to turn those benefits into real financial confidence.”

Toward better employee engagement in the company sponsored retirement plan, and ultimately better financial outcomes and more secure retirements for all, 401k sponsors can: “Take immediate steps by reassessing how benefits are communicated and ensuring investment options such as target date strategies and capital preservation solutions reflect today’s market conditions.” The Franklin Templeton survey also points to the importance of “personalized retirement investment options,” with 91% of employees expressing this preference. Acting on the survey findings, retirement plan sponsors will want to work with advisers and services providers that can help to:

Simplify benefit design and communication
• Focus on clear, actionable guidance
• Personalize solutions to employee needs

Multiple Channels and Personalized, Clear Content

Retirement plan consulting firm World Investment Advisors underscores the importance of using multiple channels to communicate with plan participants, as well as motivating action through personalized content, and shares these best practices:

Use a mix of email, intranet posts, printed handouts, short videos and in-person or virtual group sessions to reach people where they are. Test and iterate: what resonates with field staff may not align with office-based workers. Consistent, repeated touches — ideally four to six per year — keep retirement planning top of mind without overwhelming your audience.

Generic plan updates may inform, but personalized content compels action. Targeted nudges — like messaging about maximizing an employer match, reminders about beneficiary designations or outreach around age-specific features such as catch-up contributions — help employees see relevance in their own lives. Using data from your recordkeeper (with appropriate privacy safeguards) can elevate cohort messaging into individualized tips and calls to action.

Attorney and ERISA specialist Ary Rosenbaum encourages scrubbing out retirement industry jargon in communications with plan participants, and reminds sponsors that even with outsourced services, their own oversight duties to the plan remain serious: “All communication from you and your plan providers must be in simple, easy-to-understand terms. Unless you are in the retirement plan business, you’re not going to have employees that understand the intricacies of retirement plans. So make sure they can understand.”

Plan sponsors are also wise to remember that the obligation to provide clear and timely information to retirement plan participants is specifically addressed by the U.S. Department of Labor (DOL) in Meeting Your Fiduciary Responsibilities. A clear Summary Plan Description (SPD) is among the critical documents on the DOL’s must list for participants, and this must be “a plain language explanation of the plan….” While updating plan communications, keep cybersecurity in mind too. The Department of Labor has obligated retirement plan sponsors to mitigate cybersecurity threats, and provides Online Security Tips for dissemination to participants and beneficiaries.

Sponsors Remain Personally Accountable for Oversight

Outsourcing services can never fully eliminate the fiduciary obligations of retirement plan sponsors. As attorney Carol Buckmann details, the selection of service providers, and diligence in monitoring them remain fiduciary responsibilities of the plan sponsor.

Despite diligence, mistakes happen, and when they do plan sponsors, can be held personally liable. Out of pocket costs add up fast: defense in the face of penalties and litigation averages $600 per hour.

To help retirement plan sponsors manage their personal liability, Colonial Surety Company offers an efficient and affordable Fiduciary+Cyber Liability Insurance bundle that can even be added to the DOL required ERISA Bond (which protects the plan–not the sponsor). Specifically, for a few dollars a day, retirement plan sponsors can protect themselves with:

$1,000,000 for Defense and Penalties if you are faced with alleged or actual breaches of fiduciary duty.
Cybersecurity Coverage for the business and plan, which addresses Department of Labor recommendations, and includes expert response services to curtail damage after an incident.

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