401(k) Plans are Valuable for Employees and Managers
Author: Keith Huggett
A 401(k) plan is a valuable benefit for your employees and a useful tool for you. While 401(k)s help your employees save for retirement on a tax-free basis, they help you increase retention while also sheltering a portion of your payroll from expensive payroll taxes. If you are considering adding this benefit or changing your provider, here are three things to look out for:
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Biased 401(k) plan administrators. Some administrators sell their own products and have an inherent preference for what they offer. Choosing an independent adviser ensures that your employees have access to the best funds. This not only makes your employees more money but also increases the likelihood that they will take advantage of the benefit.
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High expenses. While administering a retirement plan is never going to be free, different advisers have very different fee structures even though they offer similar services. There is no reason that your employees should have to pay much more than 1 percent in administration fees for their 401(k) account, even if your company's total balance is relatively low.
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Investment management. Unless you have a pool of employees who are adequately knowledgeable about investing, make up a formal Investment Committee to review the terms of your company's 401(k) plan and the investments that are available to it, look for a 401(k) provider that can serve as an ERISA 3(38) adviser and manage the plan's investments. This gives your employees access to expert advice on how to invest their money without you or your staff having to take time or liability for providing the advice. Many advisers provide this service for little cost with others doing it for free.
Whether you are looking to institute a new 401(k) plan or change your existing provider, contact the experts at The Tax Office, Inc. for help. We can help you identify the right provider for your business and explain how offering this benefit to your team can affect your company's profitability and its tax liability.
