Commercial Insights

Trends in employer-sponsored retirement plans: How they’re evolving

Modern plan features reflect a changing workforce and financial landscape.

Key takeaways

• Automatic enrollment, Roth options and target date funds may help increase participation and savings rates.
• A multigenerational workforce is reshaping plan design, communication and benefits strategy.
• Employers are expanding financial wellness and retirement income support to potentially improve long-term outcomes.

Workplace retirement plans remain one of the most important tools employers use to attract, retain and support top talent. Core elements such as 401(k) and 403(b) plans, employer matching contributions and employee education continue to form the foundation of retirement benefits. What has changed is how these plans are designed, communicated and used as the workforce and financial landscape evolve.

Over the past several years, plan sponsors have steadily refined plan features to improve participation and outcomes. Roth contribution options have expanded tax diversification for employees. Target date funds have simplified investment decisions and become the default choice for many. Automatic enrollment and automatic escalation have helped to increase participation and savings rates, especially among younger and lower paid employees.

Under the SECURE 2.0 Act, automatic enrollment is now required for most new defined contribution plans established after the law’s enactment, making auto enrollment a standard feature rather than an optional one for many employers. As a result, industry data suggests that record participation levels have become the norm across much of the retirement plan landscape.

Roth accounts and catchup contributions

Beginning in 2026, higher income workers must make catchup contributions in post-tax Roth accounts, eliminating the immediate tax deduction on those extra savings.

The shift, created by the SECURE 2.0 Act, is not expected to reduce how much people save, but it may reshape how they view Roth accounts. It applies to participants 50 and older who earned at least $150,000 in 2025.

Employers are expected to make a good faith effort to comply now, though the IRS allows plan amendments to be finalized by 2027. If a plan does not offer Roth contributions, high earners cannot make catchup contributions at all. For plan sponsors, the transition will bring added administrative complexity.

Meeting the needs of a multigenerational workforce

Today’s workforce spans four generations, each at a different stage of its financial journey. “A retirement plan must serve someone nearing retirement age as well as someone who's just entering the workforce,” says Chris Monte, Institutional Strategist. “That's the hardest thing for an employer, a plan sponsor to actually handle—how do you deal with the two extremes?”

• Gen Z workers are entering the workforce with a strong awareness of the importance of saving early but face competing priorities such as student loans, housing costs and building emergency savings.
• Millennials, now the largest segment of the workforce, have moved into mid career roles. While participation and contribution rates have risen, many still feel pressure from family expenses and long term financial uncertainty.
• Gen X employees often describe themselves as behind on retirement savings, balancing peak earning years with caregiving responsibilities for both children and aging parents.
• Baby Boomers are increasingly focused on transitioning from saving to spending. Many expect to work longer, either by necessity or choice, and need support turning accumulated savings into reliable retirement income.

This diversity has pushed plan sponsors to rethink both plan design and communication strategies.

Benefits strategy: A strategic advantage

While the labor market has cooled from the volatility of the early 2020s and employers have become more selective, competition for specialized skills remains strong.

Workers continue to view retirement benefits as a key component of overall compensation. Employers are responding by regularly benchmarking plans, enhancing matching formulas and adopting features that promote long-term financial security.

Retirement plans are no longer evaluated solely on compliance or cost. They are increasingly viewed as a strategic benefit that may help support workforce stability, productivity and employee well-being.

Financial wellness as a core benefit

Financial stress remains a significant concern for employees, driven by persistent cost of living pressures, market volatility and uncertainty about long term economic conditions. In response, many employers have expanded financial wellness offerings beyond retirement education alone.

“When employees have financial problems, that’s another consideration. Some research suggests employees experiencing financial stress may be less productive,” says Monte. “Also, if the plan sponsor doesn’t get them engaged in and actually saving for retirement, it's going to be much more difficult for those employees to retire on their own terms.”

Today’s programs often include resources on budgeting, debt management, emergency savings, home buying and retirement planning. Content is delivered through a mix of digital tools, webinars, interactive courses and one on one guidance, allowing employees to engage in ways that fit their preferences and life stage.

Smarter, more personalized communication

Employee communication has continued to evolve. Plan sponsors increasingly recognize that a single approach does not work for every audience. Younger employees may respond to mobile friendly content and short educational nudges, while older workers often value detailed guidance and access to live specialists.

Effective plan sponsors use a blend of digital and personal outreach, supported by data insights that show how employees are engaging with the plan and where additional education may be needed.

5 trends in retirement plan investments

Creating a flexible and well governed investment menu remains a core responsibility for plan sponsors. Several trends are reshaping how those menus are structured.

1. Target date funds remain the cornerstone

   Target date funds continue to serve as the primary investment choice for most plan participants and often hold the majority of plan assets. Their appeal lies in simplicity and professional asset allocation that adjusts automatically over time.

   In plans that offer them, the majority of participants use target date funds exclusively, particularly when they are designated as the plan’s qualified default investment alternative.

2. A focus on “through retirement” design

   Many modern target date funds are now designed not only to help participants reach retirement but also to support them through the early years of retirement. These funds may continue adjusting asset allocations after the target date, balancing income generation with capital preservation for participants who keep assets in the plan.

3. Streamlined investment menus

   As target date funds can potentially meet the needs of many employees, plan sponsors have reduced the number of standalone investment options. The goal is to provide meaningful choice without overwhelming participants. Most menus now pair target date funds with a focused set of passive and active options across major asset classes for those who prefer a hands on approach.

4. Growth in managed accounts

   Managed accounts have gained traction as technology has improved personalization. These solutions use participant specific data such as age, salary, savings rate and outside assets to create customized portfolios. Fees are typically asset based, and many employees see value in the individualized guidance as retirement approaches. However, industry research suggests there is growing scrutiny over fees, auto default into managed solutions and conflicts of interest.

5. Expanding retirement income solutions

   Helping employees convert savings into income is now a top priority for many plan sponsors. More plans are offering or evaluating retirement income options, including annuity based products, while also providing tools and advice that help participants understand withdrawal strategies, tax considerations and longevity risk.

   “Older generations were taught to accumulate, to put as much money as you can away for retirement. No one really addressed how to de-accumulate,” Monte says. “When you get close to retirement, what do you do? How do you know if you have enough there? How do you actually take that money and retire on your own terms? Employers are increasingly stepping up to help.”

How Regions supports retirement plan sponsors

The Regions Institutional Retirement Services team may partner with plan sponsors to design and manage defined contribution retirement plans that support both employee outcomes and organizational goals. Working alongside clients, Regions helps with adapting plans to regulatory changes, evolving workforce demographics and shifting market conditions.

Investment lineup design

When engaged under a written agreement, Regions may serve as either a 3(38) or 3(21) fiduciary and assist in developing a prudent investment plan guided by a clear investment policy statement. This framework supports consistent monitoring and informed decision making over time.

Ongoing plan insights

In regular committee meetings, the Regions investment team provides updates on investment performance and participant behavior, offering insights into trends such as default investment usage, changes in contribution patterns and shifts in risk tolerance.

Benchmarking and competitiveness

Benchmarking tools can help plan sponsors compare their plan features and outcomes with peers, supporting informed decisions that enhance competitiveness in recruiting and retention.

To learn more, visit regions.com/wealth-management/retirement-plan-services.