Choosing the Right 401(k) for Your Employees & Your Business

by | Business, Financial Planning, Retirement

Reading Time: 2 minutes

Implementing a 401(k) plan for your employees is good business. It means you’re thinking strategically, that you care for your employees, and are focused on the long-term health of your company. Implementing a retirement plan:

    • Can help you attract and retain top talent.
    • May make you eligible for tax credits.
    • Can allow you to deduct contributions to employee 401(k)s as business expenses.
    • Helps ensure that your employees are preparing themselves for their future well-being.

In short, many good reasons exist to implement a 401(k) plan, and hundreds (if not thousands) of providers are eager to help you. Choosing among those providers can be bewildering, so we’ve compiled a preliminary checklist to help you get started. Of course, your business and its needs are as unique as your employees, so customize this list and prioritize it however suits you best.

Starting Checklist for Evaluating 401(k) Providers

    1. Assess (and rank) the reputation of the providers you’re considering. Read client reviews and see if the Better Business Bureau has anything to say about them.
    2. Ask the providers you’re considering to define their corporate structure and certifications. Are they an investment broker? An insurance agency? Do they employ Registered Investment Advisors with a legal obligation to put your and your employees’ interests first?
    3. Larger platforms power most solutions – recordkeepers, plan administrators, investment managers, financial professionals, etc. Know who they are and the role(s) they will play. Are they well known? Respected? Leaders in their industry?
    4. Determine what fiduciary role the provider will assume in the relationship and what protection from fiduciary liability they offer.
    5. Ask for references who will share their experience with the provider—rank providers on ease of implementation and administration.
    6. Ask for an apples-to-apples cost to your business based on your employee/participant base size.
    7. Review the investment options that will be available to your employees and their relative costs.
    8. Nail down the specifics of administrative responsibilities. The IRS provides a checklist for defining key service agreement elements with plan providers.
    9. Ask for a demonstration of the interface you’ll use to interact with the provider and what your employees will use to access their 401(k). Rate them on how intuitive and easy to use they are.
    10. Add more items to this checklist based on what you learn from the preceding line items and what emerges as most important for your business and your employees.

Conclusion

The road to implementing a 401(k) plan for your employees may get a little rocky sometimes, so put the work squarely on the providers – they should be eager to earn your business – and keep yourself firmly in the driver’s seat. Given that nearly half of US families currently have no retirement savings, what you’re trying to do for your business, your employees, and their families are both essential and well worth the effort. Please fill out our contact form if you have questions or need assistance choosing a 401(k) plan for your business. We look forward to speaking with you soon.