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Category: 401(k) Plan Information

Get the most up to date 401(k) Plan Information from Ubiquity Retirement & Savings. Find the most recent rules and regulations, made easy to understand, along with tips and advice from our team of 401(k) planning experts. Free consultation- call Ubiquity today at 855.466.5825.

55 million American workers—more than 40% of full-time, private-sector employees—don’t have access to a workplace retirement savings plan. As very few employers offer pensions and Social Security is drying up, with funds expected to be depleted as soon as 2035, the responsibility for saving falls more on the individual than ever before.

Automatic enrollment is a retirement plan feature that enables employers to admit new participants into the plan at a pre-set deferral rate. Instead of the traditional method of waiting for the participant to meet eligibility requirements and then enrolling manually (or not – many eligible employees procrastinate or forget), this lets employers add new eligible participants quickly and easily.

But why is this so great?

The #1 most significant element to impact a plan balance is the contribution rate.  

Not investments, not management. Simply contributing to a retirement plan makes all the difference, and we designed our 401(k) plan options with this in mind. Here are three compelling reasons why small business owners should embrace the ease that automatic enrollment options bring to your 401(k) plan:

1. Auto-enrollment makes saving easy for employees

Although a 401(k) plan is the second-most popular employee benefit after health insurance, only a fraction of employees actually participate because they believe that enrollment is complicated.

But a plan with the auto-enroll feature removes that complication and gets employees the benefit they want as soon as they’re eligible to enter the plan without the hassle of completing forms. They can start saving for retirement and accumulating interest on those savings sooner, which means more money for their retirement!

Employees can always opt out but using auto-enrollment has shown to double or even triple the rate of participation, particularly among younger employees and those earning less than $30,000.

2. Auto-enrollment helps employers attract and retain talent

Staying competitive in the job market is vital in today’s economy. It is becoming ever more important to attract and retain employees—and offering free snacks or a ping-pong table is not going to cut it. Instead, salary, healthcare insurance, and a retirement plan are the top three most critical elements job seekers consider.

Giving your employees a way to save for their retirement is a cost-effective and easy way to attract and retain talent and maintain an edge over the competition.

3. Employers whose plan features auto-enrollment save on taxes

All employers who open a new 401(k) plan may be eligible for substantial tax credits. You can qualify for up to $15,000 in credits just for opening a new 401(k) plan.

And when you add automatic enrollment, you save even more. This one feature can qualify you for a tax credit worth $500 per year for the first three years of the plan.

These tax credits for your business—a total of up to $16,5001—can help small business owners like you save for your own retirements.

A few things to remember:

Ubiquity 401(k) plans offer the option of auto-enrollment with or without auto-escalation (i.e., to have their savings amount increase automatically). Participants can opt out of auto-enrollment at any time to:

  • Change their contribution amount
  • Make Roth contributions (if available in the plan)
  • Opt out of participating in the plan altogether

All contributions made through auto-enrollment remain in the participant’s account even if they opt out within the first 90 days. Once a participant opts out of auto-enrollment, they cannot opt back into having their contribution amount(s) increase automatically if auto-escalation is included in the plan; however, they can change their savings amount at any time.

To speak with a retirement expert on which retirement plan is right for your small business, reach out to Ubiquity today.

 

 

1 Eligible employers may be able to claim a tax credit of up to $5,000, for three years, for ordinary and necessary costs of starting a 401(k) plan. IRS’ qualifying factors are: you had 100 or fewer employees who received at least $5,000 in compensation from you in the preceding year, you had at least one participant who was a non-highly compensated employee (NHCE) and in the three tax years before the first year you’re eligible for the credit, your employees were substantially the same employees who received contributions or accrued benefits in another plan sponsored by you, a member of a controlled group that includes you, or a predecessor of either. Those plans with automatic enrollment can claim a tax credit of $500 per year for a 3-year taxable period.

Ubiquity is not a registered investment advisor, and no portion of the material herein should be construed as legal or tax advice. Please consult with your financial planner, attorney and/or tax advisor for advice.

 

While avoiding certain IRS non-discrimination testing is usually the main reason small businesses switch over to a Safe Harbor 401(k), these plans offer additional benefits to employers. Three reasons Safe Harbors are among the best 401(k) plans for small businesses include:

  • Compliance
  • Flexibility
  • Attracting and retaining top talent

As a business owner, implementing a 401(k) plan is perhaps the most popular and effective way to ensure your employees are in a position to retire at a reasonable age.

However, the Internal Revenue Service requires employers who offer 401(k) plans to jump through several hoops, which can make it difficult for business owners (particularly owners of small businesses) to provide the benefit. One of the biggest obstacles in the way of offering a 401(k) plan is the IRS’s annual non-discrimination testing. During this test, the IRS checks to ensure that employers are not unfairly favoring certain employees. If a business fails this test, it can face severe punitive consequences.

As a result, many small businesses are better served by offering a Safe Harbor 401(k) plan, which makes them exempt from certain non-discrimination testing. These plans require mandatory employer contributions, as well as immediate vesting for employees.

#1. Helps Ensure Compliance

When a business offers a 401(k) plan, the IRS ensures the business does not unfairly favor highly-compensated employees (HCEs) through non-discrimination testing, performed annually. To do this, the IRS compares plan participation and contributions of every employee in the business, from entry-level employees to the owner.

According to the IRS, traditional 401(k) plans must follow these three rules to avoid failing the non-discrimination testing:

  • HCEs cannot contribute greater than 2% of the average contribution of all other eligible employees. For example, if the average employee is contributing 4% of their income to the 401(k) plan, HCEs may not exceed 6%.
  • HCEs cannot receive more than 2% in contributions compared to the average employee. For example, if the average employee is receiving 2% of their income in contributions to their 401(k) plan, HCEs may not exceed 4%.
  • The combined assets of key employees’ (owners and officers) retirement accounts cannot exceed 60% of the employer’s entire 401(k) plan.

If a business’ plan fails these tests, it may be costly to correct. While larger businesses may have the ability to balance these requirements, it can be difficult for smaller businesses with limited manpower to stay in compliance.

A Safe Harbor 401(k) plan is designed to meet these requirements without any extra effort. And since Safe Harbor 401(k)s offer the same contribution maximums as traditional plans, HCEs can maximize their contributions without the plan failing the non-discrimination testing.

#2. Provides Flexibility

For small businesses, flexibility is one of the most important factors to consider when choosing a retirement plan. Safe Harbor 401(k) plans provide this flexibility with three different options:

  • Basic Matching:

The Safe Harbor is a tiered match where the employer matches 100% of the contributions up to 3% of the employee’s compensation, and 50% of the employee’s deferrals up to the next 2% of compensation.

  • Enhanced Matching:

If the business chooses an enhanced matching plan, it will match 100% of an employee’s contributions, up to a certain percentage of compensation (minimum of 4%).

  • Nonelective Contributions:

Under a nonelective contribution plan, the employer contributes 3% of compensation to the employee’s 401(k) account, whether they choose to participate in the plan or not.

These percentages are minimums – if the business wishes to contribute more to its employee’s plans, they are free to do so.

#3. Helps Attract and Retain Talent

Another reason businesses choose to offer Safe Harbor 401(k) plans is to improve their ability to attract and retain top talent. In a competitive market, benefit plans allow employers to differentiate themselves from other employers. With a Safe Harbor 401(k) plan, employees are guaranteed an employer-contributed retirement account, which can greatly assist in the hiring process.

Moreover, top talent is more likely to be retained with a Safe Harbor 401(k) because the plans allow highly compensated employees to maximize their contributions without the fear of refunds or corrections that usually are associated with 401(k)s. Combined, these factors give small businesses a leg-up on their competition.

Contact Ubiquity for a free Safe Harbor consultation and learn how a Safe Harbor 401(k) can help your business.

 

 

 

Along with competitive compensation and robust healthcare benefits, offering a retirement savings package such as a 401(k) is a crucial way for large and small businesses alike to attract and retain top talent.

Implementing a plan is more affordable than ever, and you’ll receive a tax credit for plan startup costs and a tax deduction for expenses paid.

But how do you start a 401(k) for your small business? Here’s a step-by-step overview of where to begin, along with answers to some common employer FAQs.

 

5 Steps to Starting a 401(k) for Your Small Business

The IRS heavily regulates the process of establishing and maintaining a 401(k). As a result, many small businesses outsource the job to a knowledgeable small business financial advisor to set up and administer the retirement plan throughout its life.

Still, every owner should understand the steps involved in starting their small business 401(k):

  • Decide Which Plan You Should Establish

Will you offer a traditional, simple, or safe harbor 401(k) plan? Or maybe a simple IRA plan is best for you. There are plenty of 401(k) plan types to choose from, so it’s essential to do your homework and determine the plan that fits your immediate needs and long-term goals.

  • Understand Your Fiduciary Responsibilities

While you’re not responsible for how your employee’s 401(k) selections perform, you are responsible for acting as a fiduciary. That means you’re legally bound to make choices about your 401(k) plan as a person who owes a duty of care and trust to your employees.

Part of acting on your fiduciary responsibilities is setting up a trust for your plan’s assets and appointing at least one trustee to manage the plan investments, distribution, and other activities. This helps ensure the funds’ use solely benefits your employees and their beneficiaries.

  • Draw Up a 401(k) Plan Document

This document outlines your plan’s details in compliance with the IRS. It should contain information including (but not limited to) details about your trust, fiduciaries, your contribution plans, and more.

  • Establish an Organized Recordkeeping Process

You’ve drawn up the plan document and cleared it with the IRS. Now, keeping meticulous records documenting the progress of that plan is essential, including information about plan values and employee contributions. In addition, you must regularly update your participants’ census and employment data to ensure they’re still eligible for their 401(k) benefits.

  • Create a Thorough Information Package for Your Plan Participants

The law requires that employers provide information to their participants about how the plan works, its features, and its benefits. It’s also essential to disclose information to both your employees and the IRS about any fees and investment changes (if applicable).

 

FAQs for Starting Your Small Business 401(k)

Q.) How much will it cost to set up a 401(k) for my small business?

Initial fees typically run anywhere from $500 to $3K. How much you’ll pay depends upon the type of benefits you choose, the size of your business, consultation fees associated with your retirement service provider (if applicable), and more. For more information, click here for the Department of Labor’s retirement plan fees and expenses guide.

Q.) How long does it take for a small business to set up a 401(k)?

That all depends upon how thorough you are. If you submit your plan with missing or incomplete information, it could mean several time-consuming rounds with an Implementations Specialist to get the correct information uploaded. You could also end up paying fees because of mistakes you accidentally made from rushing through the details of your plan.

Q.) How much should I contribute to the plan?

You can contribute as much as you’d like within IRS limitations. Remember that employer contributions are tax deductible on your small business’s federal tax returns. Just as importantly, think about the positive impact matching or profit-sharing will have on morale, your relationship with your employees, and your employee’s financial health.

Q.) How much should participants contribute?

Participants may contribute as much as they wish within IRS limitations. Encourage your employees to research the investment options available and educate them on the benefits of a 401(k) to help make comfortable retirement a reality.

Q.) What are the maintenance costs for maintaining a 401(k)?

Once you select a 401k for your small business and get it up and running, you’ll need to pay fees associated with ongoing operations, services, investments, and expenditures for matching contributions.

Starting a 401(k) promotes employee morale, which leads to improved retention and a better ability to attract new talent. It also helps contribute to your and your employees’ financial well-being. The knowledgeable professionals at Ubiquity are here to assist with customizing a low-cost, easy-to-manage retirement plan for your small business.

 

 

 

With the end of the year fast approaching, many small business owners are looking for tax savings. December is not too late to open a new 401(k) account, convert to a new retirement account type, or make contributions. Depending on your situation, you may have more time than you think to plan the ideal tax scenario for 2022.

If you’ve put off thinking about your retirement until the end of the year, here are a few reasons to act now:

ONE: Generous contribution allowances will help you save for retirement

A 401(k) account offers much higher contribution limits than most IRAs : some of which max out at just $6,000. SEP IRAs do not allow employee contributions, so you may not be able to save as much as you’d like. In 2022, the annual 401(k) limit is $20,500 for employees or $61,000 for employer/employee totals, plus an additional $6,500 if you’re age 50 or older.

TWO: You’ll start compounding interest sooner rather than later

When you invest in a 401(k), the money you add generates interest. This interest compounds year after year, as you earn interest on your interest.

Here’s an example. Let’s assume a very modest ability to save and a so-so economy returning just 5 percent. If you were to put in $5,000 this month and contribute just $100/month to your 401(k), in 30 years’ time you could have $105,924 saved for retirement.

On the other hand, say you put in the maximum of $61,000 today and contribute at least that much every year for 30 years. You’d be sitting on $4.2 million or more for retirement.

How much will you pay for 401(k)? Get an instant quote.

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Or schedule a free consultation with a retirement specialist.

THREE: You had a particularly profitable year

Some 401(k) plans allow you to make a year-end contribution deposit directly into your account to reduce how much tax you owe for 2022. That can really boost your retirement savings without cutting into your regular paychecks.

FOUR: You want to get on track for next year

Opening a 401(k) now will help you attain your New Year’s resolution to save more for retirement in 2023. Establishing an account with a generous contribution level is one of the best ways to achieve a comfortable future. If you want to hit the maximum for 2023, you can save up to $1,708.33 per month (for an annual total of $20,500). If you’re age 50 or older, you can put in an extra $541.66 a month ($6,500 total). If you are self-employed, you can contribute as both employee and employer up to a maximum of $61,000 a year, plus the contribution for those age 50 or older.

The deadline is coming up

If you are self-employed with no full-time regular employees working for you (with the exception of a spouse), then you could qualify for tremendous tax savings with a Solo 401(k) account. You will be able to contribute as both employer and employee.

This means you can deposit a maximum of $61,000 (plus $6,500 more if you are over 50 years old) for yourself, which will then reduce your taxable income for 2022. You can also add your spouse to double your household savings if your spouse is not covered by another plan.

All you have to do is sign the Solo 401(k) adoption documents by December 31, 2022, and you will have until your tax return due date (April 17, 2023) to make the contributions for 2022. It is possible to apply for extensions to have until October 17.

If you’ve had a very lucrative year, you can also concurrently contribute money each month to put toward your 2023 return. If not, you can always take your time and save for the upcoming year well into 2024 in the same fashion, filing for tax return extensions if necessary.

The deadline for opening a traditional 401(k) plan is later!

The SECURE Act brought good news for employers: an extended deadline for adopting a new traditional 401(k) plan! You used to have until December 31, but now you have until the tax return deadline, including extensions. Here’s what those 401(k) contribution deadlines look like for the 2022 tax year:

  • 12/2/22: Convert a traditional 401(k) into a Safe Harbor for 2022 with 3% nonelective contribution
  • 3/15/23: Adopt a 2022 traditional 401(k) plan if you are taxed as a Partnership or S-Corp
  • 4/17/23: Adopt a 2022 traditional 401(k) plan if you are a Sole Proprietorship or C-Corp
  • 9/15/23: Adopt a 2022 traditional 401(k) if you filed an extension as a Partnership or S-Corp
  • 10/16/23: Adopt a 2022 traditional 401(k) if you filed an extension as a Sole Proprietorship or C-Corp
  • 12/31/23: Convert a traditional 401(k) plan into a 4% nonelective Safe Harbor plan for 2022
  • Employees do not have more time to make salary deferrals, but employers have more time to decide whether they want to make a year-end profit-sharing contribution. Adding a Safe Harbor amendment to your plan is a great option if you worry you might not pass nondiscrimination tests for the year. Fortunately, you have plenty of time to make this decision.

Planning for the 2023 Plan Year

Now is also a good time to plan for the 2023 tax year using the following deadlines:

  • 11/2/22: Notify SIMPLE IRA participants that their plan will convert to a new 401(k) plan on 1/1/23
  • 12/2/22: Notify participants that the traditional 401(k) will convert to a matched Safe Harbor in 2023
  • 12/31/22: Plan your conversion of an existing 401(k) to a match-based Safe Harbor for 2023
  • 10/1/23: Adopt a new Safe Harbor 401(k) plan for 2023
  • 12/2/23: Convert a traditional 401(k) plan to a 3% nonelective Safe Harbor for 2023
  • 3/15/24: Start a new traditional 401(k) for 2023 if you’re an S-Corp or Partnership
  • 4/15/24: Start a new traditional 401(k) for 2023 if you’re a C-Corp or Sole Proprietorship
  • 9/15/24: Start a new traditional 401(k) for 2023 if you’re an S-Corp or Partnership with an extension
  • 10/15/24: Start a new traditional 401(k) for 2023 if you’re a C-Corp or Sole Proprietor with extension

If you have any questions about setting up a small business 401(k), contact Ubiquity to administer the plan.

The June 30, 2022, CalSavers enrollment deadline has passed. California businesses that have at least five employees and that have not yet enrolled in CalSavers or adopted a custom retirement savings plan now face penalties beginning at $250 per eligible employee if the business remains non-compliant for 90 days after it receives a violation notice from the State.

California small businesses that have missed the deadline can still save on their taxes for this year if they act quickly and choose to either opt in to the CalSavers 401(k) or, alternatively, start their own private 401k retirement plan. In many cases, a customized, low-cost 401(k) savings vehicle may provide more tax benefits, greater savings, and increased employee satisfaction than the state-run CalSavers program.

How will California enforce penalties on small businesses that have missed the CalSavers deadline?

Legal challenges to the CalSavers Law have all been dismissed or denied, which leaves California businesses with the option of enrolling their employees in CalSavers or adopting their own 401(k) plan. Companies that fail to do so will be fined by the CalSavers Retirement Savings Board, which is partnering with the State’s Franchise Tax Board (FTB) to levy penalties on non-compliant businesses.

Why might a small business choose a custom retirement plan over CalSavers?

Although it may seem simpler for a small business to choose the default CalSavers option, doing so may forfeit significant benefits that are available as part of a custom plan.

There are important differences between the state-sponsored plan and a Ubiquity 401(k). A 401(k) solution provides employers with the opportunity to maximize their contributions and tax savings while helping their employees save for the future. With a 401(k) plan you can contribute 3 times more than with an IRA, and there are other important customization options that a 401(k) plan enables.

Consider the following, for example:

  1. A 401(k) allows employees to contribute more than three times the contribution limit of the CalSavers option.
  1. Federal legislation known as the SECURE Act incentivizes small businesses to establish qualified retirement plans by giving them up to $16,500 in tax credits.
  1. Unlike CalSavers, which charges employees an asset-based fee for administering their retirement savings, a private plan can be established on a flat-fee basis, which will give employees greater fee savings.

What other important differences between the state run program and a 401(k)?

There are several critical differences between these plans. Beyond the extra savings any participant can build with a 401(k), employer contributions are allowed as well, meaning small business owners can use this contribution to reward and incentivize employees. This includes an additional employer contribution of up to $40,500 to their own accounts. This chart lays out even more differences between the two types of plan:

Table comparing the CalSavers retirement IRA versus the Ubiquity 401(k) including 3X more savings and up to $16,500 in tax credits for small business owners with a Ubiquity 401(k)

Choose the better plan for your small business and your retirement. Open a Ubiquity 401(k) to satisfy the mandate, save more, lower your taxable income, earn business tax credits, and retain top talent. Call 866.634.6116 or schedule a free consultation with a retirement specialist.

Every month holds important deadlines for employers offering small business 401(k)s. Fortunately, plan administrators at Ubiquity are dedicated to helping you achieve maximum results for your retirement savings and remain in compliance with IRS guidelines. The following checklist will help you prepare for the road ahead, and you can also use our 401(k) compliance calendar to stay on top of any deadlines.

2022 401(k) Deadlines

January 1: Safe Harbor match begins.

If you opted for a Safe Harbor 401(k) plan for the year, you can begin matching funds now.

January 15: It’s census data time!

To aid with compliance tests, send your recordkeeper the name, birth date, date of hire, termination date (if applicable), hours worked, compensation, and contributions for every employee.

January 31: Send forms to distribution recipients.

Employers must send Form 1099-R to plan participants who received distributions last year.

February 15: Send Q4 participant statements.

All plan participants are entitled to receive regular statement updates to track plan balances.

February 28: File Form 1099-R with the IRS.

The IRS requires hardcopy Forms 1099-R by this deadline.

March 15: Process corrective distributions for failed tests.

If you failed last year’s ADP or ACP tests, this is the last day to refund portions of the plan balance back to highly compensated employees and/or make additional distributions to lower paid employees to bring the plan into compliance. Failure to meet this deadline results in a 10% penalty and requires employers to file Form 5330.

March 15: If you’re an S Corp or LLC Partnership, file your taxes.

Not only will you need to file your taxes by this day, but you will also need to deposit all employer contributions to receive a tax deduction for the year unless you have petitioned for a six-month extension.

March 31: File Form 1099-R electronically with the IRS.

Employers must report distributions for the 2021 calendar year by this date.

April 1: Initial RMDs are required for participants turning 72 on or after January 1, 2022.

The year participants turn 72, they must make a first withdrawal from their 401(k) by April 1, 2022. In subsequent years, they can wait until the end of the tax year to take a distribution.

April 15: 402(g) refunds are distributed.

Participants who over-contributed must receive 402(g) excess deferral refunds by this deadline. It can be especially common among people who contributed to more than one employer 401(k) plan in a given year. Failure to meet this deadline could result in a tax penalty for the employee and operational error issues for the plan.

Limits for 2021 were $19,500, plus $6,500 allowed for those age 50 and older. This year’s plan limit increased to $20,500.

April 15: If you’re a C-Corp, Sole Proprietorship, or LLC Corporation, file your taxes.

Unless you received an extension, you’ll need to file your taxes and deposit employer contributions by this date.

May 15: Send Q1 statements to participants.

Employers must send the first quarter of 2022’s statement balances to participants before this deadline.

June 30: Correct distributions for EACA plans.

If your plan contains an Eligible Automatic Contribution Arrangement (EACA) and you failed ADP or ACP tests, make corrective distributions by this date to avoid the 10% IRS penalty and Form 5330 filing.

July 31: Report financial updates to the IRS using Form 5500.

Plan providers typically file these forms on your behalf, but we’ll need a signature. To request an extension, fill out Form 5558 by this date.

July 31: Communicate updates on any terminated employees using File Form 8955-SSA.

Any plan participants who are separated from service – either due to termination or voluntary withdrawal – must be reported to the IRS, with benefits due at retirement age.

July 31: File Form 5330 related to an error from last year.

If you made a mistake in 2021, you can file Form 5330 up until this date.

NEW! July 31: Submit a cycle 3 plan document restatement.

Your plan provider will submit a fully updated plan document that is rewritten to reflect any recent changes in legislation. This restatement does not apply to individually designed plan documents, 403(b) plans, or government plans.

August 15: Send Q2 statements to participants.

Employers must notify all participants of the second-quarter statement balance.

September 1: Send Safe Harbor notices for new plans.

Employers must notify participants they’ve added a Safe Harbor provision, which will become effective October 1, 2022.

September 15: If you’re an S Corp or LLC Partnership with an extended tax deadline, file now.

Final employer contributions are due now if you’ve received the six-month tax extension. You’ll also be able to receive your tax deduction for last year’s taxes at this time.

September 30: Send the Summary Annual Report (SAR) to all plan participants.

Similar to Form 5500, the SAR provides a summary of the plan’s financial status. It is possible to file for a two-and-a-half month extension if you are filing a Form 5558 to extend your 5500 filing.

October 1: Review your RMDs.

Before the year’s end, you’ll want to review the list of participants who need to take distributions by December 31, 2022.

October 1: Add a Safe Harbor provision to your 401(k) plan or set up a new Safe Harbor 401(k).

A Safe Harbor is a great option if you’ve failed nondiscrimination testing in the past or if you’re concerned about potentially failing these tests. If participants are making elective deferrals you’ll be matching, you’ll need to let them know.

October 15: If you’re a C Corp, Sole Proprietorship, or Corporation LLC with a tax extension, file now.

You can now file your extended Form 5500, Form 8955-SSA if you were granted a Form 5558 extension. Make all employer contributions and you’ll receive a tax deduction for the 2021 tax year.

November 1: Plan ahead for required December 1 notices.

While not a hard deadline, it’s recommended that employers begin planning and let their plan administrators know if they’d like to change the type of safe harbor plan they have or if they’re planning to add a safe harbor provision for the following calendar year.

November 15: Send Q3 statements to participants.

Let plan participants know how their balance is doing in the third quarter.

December 1: Issue Safe Harbor plan notices.

Whether your Safe Harbor is old or new, you’ll have to send notice 30 to 90 days before the first of the year

December 15: If you received an extension, distribute the Summary Annual Report now.

If you received a Form 5558 extension, you’ll need to send the SAR to all eligible employees

December 31: Catch up on anything you may have missed.

The end of the calendar year is a day of reckoning for correcting failed ACP/ADP tests. If you want a plan in 2023, now is a great opportunity, as elective deferrals cannot be retroactive. Current year RMDs must go out. It’s your last chance to convert your 401(k) into a Safe Harbor.

Any other discretionary changes affecting the 2022 plan year must be signed. Fee disclosures required under 404(a)(5) must be distributed as well.

The 401(k) contribution deadlines for an employer’s plan sponsor can be confusing because the deadlines for your 401(k) plan’s 2022 year won’t arrive until well into 2023. This is great news, as the calendar allows for more time to make contributions and ensure compliance. Working with small business 401(k) provider Ubiquity, you can rest easy, knowing we’re tracking all these key dates for you and communicating well in advance so you can focus on the future.

Contact us to learn more about changing providers or setting up a new 401(k) plan for your small business. We offer easy setup and affordable flat fees!

An online 401(k) offers small businesses many advantages, including payroll integration, lower plan sponsor costs, lower employee costs, and easier employee onboarding. Your small business and employees may both benefit by switching from your traditional 401(k) to a more flexible 401(k) offered by an online provider like Ubiquity. Continue reading to learn about all the benefits of a technology-driven retirement plan for your company.

Online 401(k) Provider Benefits from an Employer Perspective

If you’ve considered switching out of a traditional 401(k), here are a few compelling reasons to go online:

Payroll integration: Traditional 401(k)s rely upon a person within the company to manually manage important aspects of the plan. This work can be tedious, time-consuming, and fraught with errors. The 401(k) business process is highly regulated by the Department of Labor and the IRS, so mistakes are not only a pain to fix, but they are also expensive.

Manual headaches cited by HR professionals when running payroll include:

  • Uploading files to the 401(k) recordkeeping system
  • Calculating new employee eligibility
  • Adding new employees to the defined contribution plan (which is a big issue for fast-growing programs)
  • Updating 401(k) deferral rates each time employees make a change
  • Calculating employee matches, vesting, etc.

By contrast, you can work with an online 401(k) provider with the capability of sharing data with your cloud-based payroll system. Someone in your company can still oversee the critical aspects of your plan, but your payroll and HR teams no longer need to cope with all of the manual tasks.

Low fees: The retirement industry is notorious for excessive fees — especially when it comes to plans from legacy financial institutions. Traditional 401(k) programs were written for huge corporations and are priced accordingly. Today, online providers such as Ubiquity focus exclusively on smaller businesses and offer low-cost plans with transparent fee structures.

Fiduciary coverage: By law, a 401(k) fiduciary ensures that all employees have access to a well-managed defined contribution plan. Large companies source 401(k) management to HR and benefits professionals, but most small businesses don’t have that sort of luxury. Often, the fiduciary responsibilities are added to the business owner, CFO, or HR head’s already-full plate. As an online 401(k) provider, Ubiquity offers 401(k) products that come with fiduciary coverage.

Let your provider absorb that responsibility, place your full focus on growing your business.

Online 401(k) Provider Benefits from an Employee Perspective

Online 401(k) providers understand how to meet the challenges and expectations of the modern era by offering:

Convenient, transparent plans: Online plans are easier and more convenient for employees to evaluate. Through Ubiquity’s many educational articles, employees can learn more about saving for retirement. We speak your employee’s language to help them make clear choices about how they’ll save for the future.

Fast enrollment: Enrollment procedures are boring at best and intimidating at worst. Completing paperwork and selecting investments pose hurdles to maximizing retirement savings. Instead, employees can effortlessly auto-enroll with Ubiquity in minutes at no extra cost. Studies show auto-enrollment can boost participation rates by 82 to 96 percent.

Digital platforms: After employers set up the plans, employees can review their accounts online or through mobile apps. Features like rebalancing or contribution changing are made accessible to all through a user-friendly dashboard.

Financial wellness tools: Ubiquity customers have access to Edukate’s complete arsenal of online financial wellness tools. These engaging benefits platforms empower employees with personalized financial guides, games, tools, and features that boost plan participation rates, as well as individual retirement savings.

Support: We support employees to work with brokers of their choice to build robust portfolios. They will have full access to a broad spectrum of investment choices, including mutual funds, managed accounts, annuities, and employer stock. Whether employees are looking to hand-pick investments from over 20,000 mutual funds and ETFs, or select a variety of turnkey investment lineups, Ubiquity offers the freedom of choice.

Communication: While some online providers only offer a chat line of dialogue, employees are welcome to call Ubiquity directly, toll-free, to have their most pressing questions answered by a live person. Though plan participants can also find most, if not all, of what they need through our online portals, we value personalized customer service equally.

Low fees: Not only are fees lower for employers, but participant fees are often lower than with traditional 401(k) plans. Unlike certain competitors, Ubiquity does not charge any fees for Assets Under Management.

Saving For Retirement Has Never Been So Easy For Employers and Employees

Social Security was once seen as a crucial safety net that allowed workers to enjoy their golden years. Today’s workforce, however, has bigger plans. Nearly a quarter of one’s life is spent in retirement. Shouldn’t these years be free from financial worry? Let Ubiquity light the way toward a path of prosperity so that you can fully enjoy it.

The good news is that most retirement fund shortfalls are driven by poor planning and misinformation. While traditional 401(k)s were confusing for small businesses to set up and administer and even more puzzling, for employees to enroll in and manage, the growing pool of affordable, flexible online 401(k) providers deliver a much-needed solution for all. The online 401(k) provider reduces the complexity of retirement planning to help companies offer a technology-driven benefit that is surprisingly simple to maintain.

It’s no secret that the life of a small business owner is a lot of work. Especially in situations where you only have a few employees (or none at all), you have to act like the Swiss army knife of your business––ready for anything and prepared for any situation. So, why add the hassle of having to pay for and run a retirement plan along with everything else? You might even wonder, is my business too small to for a 401(k) plan?

Here’s the scoop: A 401(k) is no longer a benefit reserved exclusively for large businesses with budgets to match.

There are budget-friendly, easy-to-use 401(k) solutions designed specifically for small businesses. Small business owners can now take advantage of the business tax benefits of a 401(k) plan and offer competitive retirement plan benefits for employees.

Not too familiar with 401(k) plans? No problem.

What is a small business 401(k)?

First things first: A 401(k) plan is a type of company retirement plan under Section 401(k) of the Internal Revenue Code. That part isn’t so important — here’s what is: A 401(k) allows you to save for retirement by putting away money on a pre-tax basis, which helps you to lower your taxable income. What’s that mean to you? It means you’ll get less of a tax bite on your annual salary in the short term, while your long-term investments grow tax-free until you’re ready to retire. Some 401(k) plan providers (including Ubiquity) also offer an after-tax (Roth) option, which means you won’t be taxed at the time you withdraw that money because you’ve already paid taxes on it.

A small business 401(k) is defined as a 401(k) plan for a company with anywhere from one to 100 employees. Here at Ubiquity, we specialize in the retirement plan needs of small and growing businesses, including owner-only and start-up businesses.If your business only employs you, your spouse or partner, and employees who would not be eligible to participate in a plan, a Single(k)® plan would your best option.

Small business 401(k) plans offer unique benefits to both business owners and their employees who participate in the plan.

Busting 401(k) Myths

Myth #1: 401(k) plans are too expensive for small businesses.

It’s true that many 401(k) plans are designed to only suit larger businesses. But the growing trend is to offer efficient, Web-based 401(k) plans that are more affordable to businesses of all shapes and sizes. Plans cost less than a daily latte, and employers have options for splitting costs with their employees.

Myth #2: 401(k) plans require an employer match.

An employer match or profit-sharing contribution is entirely optional with a 401(k). If you choose to offer this feature to your employees, it could help to boost participation. Keep in mind that employer contributions are also tax-deductible for your business.

Myth #3: Our employees won’t participate because they don’t make enough money.

There is no minimum contribution required with a 401(k). Offering an employer match can provide additional incentive for your employees to participate in the plan.

Myth #4: It’s too complicated.

Starting a 401(k) plan doesn’t have to be convoluted. With the right plan, you can get a new plan running in just a few hours of your time. And it’s easy to manage, with tools and reports available right at your fingertips.

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Read Ubiquity’s 3 Steps to Building Financial Security in an Economic Downturn

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44 Montgomery Street, Suite 3060
San Francisco, CA 94104
Support: 855.401.4357

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© 2022 Ubiquity Retirement + Savings
Privacy Policy
Do not sell my info
44 Montgomery Street, Suite 3060
San Francisco, CA 94104
Support: 855.401.4357

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