Yes, a Low-Cost 401(k) Plan Could be Right for Your Small Business

Author: Jason Gross, AIF ®, CRPS / Reviewer: Callie Adams Farnsworth, QKA, CAFCA
6 Jun 2023 / 401(k) Plan Information, Small Business 401k

As a small business owner, you might be wondering if offering a 401(k) plan to your employees is a worthwhile investment. While providing a retirement savings plan can appear expensive, there are significant advantages to offering one—and luckily, there are plenty of low-cost 401(k) plans available for you to consider (hi, we’re Ubiquity).

Benefits of a Low-Cost 401(k) Plan for Your Small Business

Some things in life are worth splurging on, but a good-quality 401(k) plan doesn’t have to be one of them. While certain 401(k) plans can be costly to set up and maintain, there are affordable options tailored for small businesses and their employees, and trust us—they come with perks.

Affordable for Small Businesses

By opting for a small business 401(k) plan with low fees and expenses, you can provide your employees with a retirement savings plan that won’t break the bank for either of you.

Simplified Administration

Low-cost 401(k) plans often come with simplified administration. This means the plan is easier to set up and manage, ultimately saving you time and money. Some low-cost plans even provide online tools and resources to assist your small business’s employees in managing their retirement savings.

Investment Options

A low-cost plan doesn’t imply limited investment options! Look for a plan that allows your employees to choose investments aligned with their retirement savings goals and risk tolerance.

How to Choose a Low-Cost 401(k) Plan for Your Small Business

Don’t let analysis paralysis overwhelm you. Here are some factors to consider when selecting the right 401(k) plan for your small business:

Fees and Expenses

Prioritize a plan with low fees and expenses to ensure these costs don’t eat into your employees’ retirement savings.

Investment Options

Seek a plan that offers a range of investment options to meet the diverse needs of your employees.

Plan Administration

If the 401(k) plan you choose is simple to set up and manage, and provides online tools and resources for your employees, chances are it could be an excellent fit.

Provider Reputation

Consider the reputation of the 401(k) plan provider. Look for a provider with a track record of offering high-quality retirement plans and excellent customer service specifically for small businesses.

Setting up a Low-Cost 401(k) Plan

Ready to get started? Follow these five easy steps to set up a 401(k) plan for your small business’s employees and set them on the path to saving for retirement:

• Choose a 401(k) plan provider that offers low-cost plans.
• Determine the eligibility requirements for the plan.
• Decide on the contribution structure for the plan—will you match employee contributions, make profit-sharing contributions, or both?
• Select the investment options that will be available to employees.
• Set up the plan and communicate with employees about how to enroll.

You’ve Set Up a 401(k) Plan… Now What?

Communication is key when it comes to informing your small business’s employees about their new 401(k) plan. Here’s how to go about it:

Provide clear information

Ensure your employees understand the plan and its benefits. Offer clear information on how the plan works, the available investment options, and the associated fees and expenses. (Bonus points for helping define commonly-used financial terminology.)

Encourage participation

Emphasize the tax advantages and the benefits of saving for retirement to motivate employees to take advantage of the plan.

Make enrollment easy

Provide straightforward instructions, online tools, and timesaving features like automatic enrollment to help employees enroll in the plan—when enrollment is foolproof, there’s no reason to skip it!

With a low-cost 401(k) plan in place, your small business can empower employees to save for retirement without burdening your budget. It’s a win-win situation that enhances employee satisfaction and helps secure their financial future. So don’t delay—explore the available options and get started on providing a valuable benefit to your team.