If you’ve been keeping up with financial news lately, you’ve no doubt noticed a new trend: class-action lawyers have begun targeting retirement plan sponsors for a wide variety of breaches of the fiduciary duty as well as a broad range of entities in retirement offerings.
Your company’s 401K plan is vital to your financial security during retirement, and to that of your employees. This tax-deferred retirement plan allows you and your workforce to set it aside before tax income in an investment account. Over time, the pre-tax dollars in this account can grow significantly, helping you save more for retirement.
If you are unhappy with your current retirement plan, it’s probably a good idea to lay out your priorities before shopping around for a high-quality, low-cost 401k plan that actually meets your needs and those of your employees.
Employees with 401K plans often aren’t getting everything they can out of the plan, but many employers aren’t making the most of their 401Ks either. While the company 401K has primarily been a vehicle for preparing employees for retirement, it can also be used to help your employees reach another major savings goal: paying for college tuition.
For most companies, a 401K plan is a vehicle to help employees save for retirement. That’s not all it can be doing, though. In fact, your company 401K can help employees save for another expensive life event: College.
Business owners faced with their first 401K audit often have a lot of questions about the process. One of the biggest concerns for owners is how much an audit is going to cost. Generally speaking, an audit costs between $6,500 and $13,000, but there are all kinds of variables. Not knowing how much your 401K audit will cost—or should cost—could mean that you end up paying more than you’re prepared to pay.
Your company’s 401K plan is a critical tool used by you and your employees to save for retirement. You know that a 401K plan will not only allow you to offer a competitive benefits package to attract and retain top talent, but run properly, it can also help you to build wealth outside of your company, on a tax efficient basis, for your retirement years.
Your company’s 401K plan is critical to not only your own retirement but that of your employees. You want to be able to maximize the plan’s benefits by educating your employees and increasing participation so they can gain the full advantage of the plan you offer. Having an advisor who can provide your employees with group education meetings can increase employee participation in your plan and help employees be better prepared for retirement. The gold standard, however, is offering your employees advice (which only a fiduciary can do) via one-on-one retirement planning meetings with the plan advisor each year. Because it can be time consuming (e.g., 20 minutes multiplied by the number of 1:1 meetings), it can cost extra, but it is usually well worth it.
401Ks have become increasingly important to delivering retirement income. With rising costs, debt, and little if any wage growth, fewer Americans are saving for their own retirement. Instead, many are relying solely on their 401K plan to fund their retirement years. And it’s up to employers to increase plan participation and improve their plans in order to better prepare their employees for retirement.
Your company’s 401K is likely the primary tool used by you and your employees to save for retirement. Run properly, the plan can also help you tax-efficiently build wealth outside of your business for your retirement years.