Benefits March 18, 2025

Financial Wellness Tool Shown to Reduce Employee Stress

Survey from FinFit found that workers that have access to and utilize financial tools, make better financial decisions and report feeling more supported by their employers.

Reported by

Workers who reported experiencing extreme financial stress saw a 60% reduction after engaging with financial wellness platform FinFit’s tools and resources, according to the company’s recent survey of 540 employees.

There was an overall 48% improvement in the number of employees experiencing anxiety or depression related to financial concerns, per FinFit.

When workers have access to and utilize financial tools, they make smarter financial decisions, reduce stress and feel more supported by their plan sponsors and employers, the FitFIt survey found. 

Employees use the platform for a variety of needs: 42% said it helped them avoid taking out a more expensive loan; 40% said it helped them pay for an emergency expense; and 29% said it help them pay down or pay off higher-cost debt.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

Those who engaged with the wellness platform were significantly less likely to rely on borrowing money, whether from friends, family or their 401(k) accounts. They were also more likely to be up to date on bills: 72% were behind on payments before using the platform, and 41% were behind after.

The survey found a 35% reduction in the number of employees living paycheck to paycheck and 175% growth in the number of employees with some amount of emergency savings.

Communication and Encouragement Needed

Barriers persist to participation in financial wellness programs, especially in the context of privacy concerns and a lack of forward thinking. Speaking at a recent conference, Alexander Alonso, chief data and analytics offer at the Society for Human Resource Management, said, “While 94% of employers claim responsibility for employees’ financial well-being, only 57% act.”

Based on data gleaned from polling 33,000 working Americans, Alonso said 66% of workers believe they are nowhere close to achieving financial wellness or even being literate about what financial wellness should be.

Plan sponsors and their advisers are implementing financial wellness programs that can help shift this dynamic. Research by MetLife showed that the effective delivery of employee benefits resulted in a 1.2x boost in productivity and significantly improved talent outcomes. As employees gain control over their finances, they experience a renewed sense of focus and purpose. 

A positive response can also come as improved engagement with the employer, the FinFit survey found. Nine out of 10 employees consider the financial wellness platform a valuable benefit, and 75% of employees believe their employer truly cares about their well-being because it provides access to FinFit.

Ask the Experts March 18, 2025

Are Separate Deferrals Needed for Regular Contributions and Roth Catch-Ups?

Experts from Groom Law Group and CAPTRUST answer questions concerning retirement plan administration and regulations.

Reported by

Q: I am confused about the new mandatory Roth catch-up rules for participants who make more than $145,000 in FICA wages and would like clarity. It sounds like the rule requires a participant to select catch-up contributions separate from the regular deferral, meaning that, in 2026, deferrals would go into both the pre-tax account and Roth account, starting at the beginning of the year. Then, if the regular deferrals do not meet the annual limit, a correction will need to be made. That would be a nightmare for taxes, and I hope I am misunderstanding.

Kimberly Boberg, Kelly Geloneck, Emily Gerard and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

A: You are right, that would be a nightmare!

As we stated in a prior column, the proposed regulations clarify that a participant who makes more than the $145,000 (indexed) threshold does not need to make a separate catch-up election for such contributions to be treated as Roth. Elective deferrals are generally not treated as catch-up contributions until they exceed the Internal Revenue Code Section 402(g) limit ($23,500 in 2025), meaning that if a participant elected only pre-tax deferrals, everything a participant defers up to the 402(g) limit would go into the pre-tax account.

The proposed regulations permit plan administrators and employers to deem any catch-up contributions made by those earning more than $145,000 in FICA wages as Roth contributions in 2026 (the “deemed Roth catch-up election”), and no special salary deferral or other election is required. So as long as the participant is given an effective opportunity to opt out of the deemed Roth catch-up election, deferrals greater than the 402(g) limit would automatically be treated as Roth catch-up contributions for the remainder of the year, and there would be no need for corrections.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to Amy.Resnick@issmarketintelligence.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future column.

 

«