When I was in college, I would run events, and one of the ways to do it, was free food. A slice of pizza could get people In the door. I think getting people to defer, the same rules could apply.

The contingent benefit rule said that other than matching contributions, you can’t incentivize people to defer or not defer in a 401(k) plan. SECURE 2.0 changed that.

SECURE 2.0 authorized plan sponsors to provide “de minimis” financial incentives to employees who elect to participate in the plan. Notice 2024-2 revealed some guidance on this change. A financial incentive qualifies as a de minimis financial incentive only if its value does not exceed $250. De minimis financial incentives apply only to employees without an existing election to defer. So people like my wife, who defer the maximum or currently defer, get nothing. A de minimis financial incentive is maintained even if provided in installments contingent on the employee’s continued deferral. Matching contributions aren’t considered a de minimis financial incentive. Of course, any financial incentive like a gift card, will be a taxable fringe benefit.