Small Business 401(k) Setup: Key Questions to Ask Your Retirement Plan Provider

Author: Siân Killingsworth / 12 Sep 2023 / 401(k) Plan Information, Small Business 401k

Overwhelmed by the thought of setting up a 401(k) plan for your small business? You’re not alone. In this guide, we’ll break down the essential questions you need to ask your retirement plan provider to make the process easier—and ensure a secure financial future for both you and your employees.

1. What Type of 401(k) Plan is Best for My Business?

Before you get lost in the details, understand there are several types of 401(k) plan available. These include traditional 401(k)s, Safe Harbor 401(k)s, and sole proprietor 401(k)s.

• Example: A small tech startup may find that a Safe Harbor 401(k) is a better fit due to easier compliance tests, allowing them to focus more on growth.

2. What are the Costs Involved?

Initiating a 401(k) as part of your retirement plan setup is a pivotal step towards a secure financial future. Know that retirement plans aren’t one-size-fits-all, especially when it comes to costs. Alongside administrative fees, investment management fees, and employee education expenses, you’ll find different pricing models. Flat fee plans can be particularly advantageous for small business owners, as they provide predictable costs that are easier to budget for. By asking targeted questions during the setup process, you’ll ensure your plan is customized to meet your business needs, compliant with legal requirements, and provides your employees with valuable benefits. Don’t delay in securing both your and your employees’ financial futures—reach out to a qualified retirement plan provider today.

• Call to Action: Make sure you get a full breakdown of these costs upfront to avoid unexpected financial surprises down the line.

3. How Can I Maximize Tax Benefits?

You can save money on taxes with a 401(k). Talk to your provider about tax credits, deductions, and employer contributions that can benefit both you and your employees.

• Call to Action: Consult your tax advisor to explore all the tax-saving opportunities available to you.

4. What Administrative Responsibilities Will I Have?

Even though a provider handles most of the grunt work, you’re not entirely off the hook. You’ll still need to manage:

• Employee communication
• Plan monitoring
• Compliance

5. How Can Employees Enroll and Manage Their Accounts?

Enrollment should be hassle-free for your employees. Find out about the enrollment process, what account management tools are available, and if there are educational resources to help your staff make wise investment choices.

6. What Compliance Measures Should I Be Aware Of?

Stay on the right side of the law by ensuring compliance with IRS regulations. Here’s what to keep an eye on:

• Nondiscrimination testing
• Timely filing of required forms

7. Can I Customize the Plan to Fit My Business Needs?

Your business is unique, and your 401(k) should reflect that. Discuss tailoring features, contribution limits, and eligibility criteria to suit your specific needs.

8. How Often Will the Plan be Reviewed and Updated?

Good retirement planning is ongoing. Find out how often your provider will assess the plan’s performance and make necessary adjustments.

9. What Employee Education and Support Will be Provided?

An educated employee is an empowered one. Ask what educational resources—like workshops, online tools, or one-on-one consultations—are available.

Your Takeaway

Initiating a 401(k) as part of your retirement plan setup is a pivotal step towards a secure financial future. By asking these targeted questions during the setup process, you’ll ensure that your plan is not only customized to meet your business needs but also compliant with legal requirements. In turn, this will provide your employees with valuable benefits. Don’t delay in securing both your and your employees’ financial futures—reach out to a qualified retirement plan provider today.

 

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.