Financial advisors have always approached their business plans by looking to expand into related industries. The difference is that in the past they have had to become experts in what are very knowledge-intensive and labor-intensive fields, while today, technology is changing everything!

Why now?

Regulations are pushing small plans toward advisors, and creating a great need for advisor support. The small market is huge, and will dominate the space for years to come. This new market reality makes it vital that practices build efficiencies that make it easier for them to serve this crowd.

Additionally, many firms are making efforts to capture a greater share of assets from their wealthy clients. Since many of them are business owners, it creates an opportunity for advisors to expand their wealth management practices by pairing it with services for businesses, primarily retirement benefits.

Today, it’s easier than ever to take on small plan business. Digital recordkeepers like 401GO have automated and integrated every aspect of the 401(k) plan process, creating a much more hands-off experience, both for advisors and for business owners.

What’s next?

The most important decision the advisor can make is to pick the right partner. With so much M&A activity happening in the recordkeeping industry, there are fewer options to choose from. Closely examining industry platform partners has become a crucial step. Look for stable and modern technology, tech-based integrations with payroll, and quality of support.

I often recommend advisors review their existing clients to determine how much potential already exists with their book of business to create an additional stream of revenue with retirement plans. Expanding services doesn’t necessarily require intense prospecting, and it’s likely to be more effective when it’s beneficial to the core practice.

With the retirement space growing significantly and the aging advisor market, the country doesn’t have enough advisors to meet demand. Technology is increasingly important to help existing and incoming advisors become efficient and effective.

Who can help? 

How can wealth advisors start leveraging wealth, insurance or benefits services to expand their plan practice? And who can help? 401GO was built to help make the retirement plan business easier and less expensive for all stakeholders, including business owners, employees, and their financial advisors. Whether you need a solo plan, start-ups, conversion plans, or even cash balance plans, you can get a streamlined experience by working with 401GO.

Convergence is a powerful trend in the financial services market and will provide a significant advantage to both experts and novice plan advisors alike—if you choose the right partners. If you’re interested in learning how we help all our advisor partners grow their plan business let us share how our cutting-edge recordkeeping technology, along with our award-winning service model, can help build stronger wealth practices.

The post How Retirement Planning Can Transform Your Wealth Management Practice appeared first on Fast and Affordable 401k for growing businesses.

Not necessarily. According to Meghaan Lurtz, Ph.D., a leading global expert on the psychology of financial planning, this can be a sign of looming danger for your relationship.

Fix, Fine, Flourish: How (and Why) Clients Fall Out of Love With You

In her recent article on Michael Kitces’ blog entitled Fix, Fine, Flourish: A Framework To Take Clients From (Just) “Fine” Stagnancy To Being Engaged Again, Lurtz breaks down a typical client’s journey into three stages.

The first stage is “Fix.” Clients seek out a financial advisor when they have immediate financial concerns to address, and as their chosen expert, you’re able to gain their trust and gratitude in this phase by helping them to stabilize their financial situation and set themselves up for a lucrative future. Nice work!

The second stage is “Fine.” Once a client’s initial issues are resolved, they transition into the “Fine” stage, where you’re likely to hear:

“Nope, don’t need anything!”

“Everything’s still good!”

“Don’t call me, I’ll call you.”

These are the words of a satisfied and seemingly stable client. You’ve resolved their most pressing financial concerns; what more could they want?

A lot, actually. In fact, they don’t just want more from you—they need more, or they’re likely to leave after their upteenth “fine” monitoring meeting. 

What Your “Fine” Clients Are Actually Thinking

No matter how impressed or satisfied your clients were in their “Fix” stage, the farther they travel into “Fine,” those feelings will start to dwindle. With no new problems to resolve for your clients, you’ll have no way to continue proving your worth, and they’ll naturally start to value you less, weakening your relationship.

And then, one day, you might find yourself blindsided by a “fine” client dropping you to manage their finances independently. Why should they retain a financial advisor who, in their opinion, isn’t needed anymore?

According to Lurtz, the psychological underpinnings of this “fine” complacency lie in the end of history illusion. This cognitive bias leads individuals to believe they’ve reached a stable point in their lives, whilst vastly underestimating the likelihood of future changes. Research involving over 19,000 participants from ages 18 to 68 reinforced this; though participants generally acknowledged that significant change had occurred in the past, they believed relatively little would change in the future, regardless of their age. This distorted perception limits our ability to envision new goals and opportunities, even as our life circumstances, interests, and aspirations continue to evolve.

So, even if a client came to you just a year ago with a mountain of financial issues to address, they may genuinely not anticipate that ever happening again, and thus not see the need to stay on as a client.

How to Become Invaluable to Your Clients—Indefinitely

The “end of history” illusion is a huge detriment when clients see their financial advisor as a simple problem-solver—which they likely do, given that this was the nature of your relationship through the “Fix” phase. (You “fixed” their problems, and now they’re “fine.”)

The key to becoming an invaluable asset to your clients is to establish yourself as someone who helps motivated business owners reach their goals, rather than someone who just manages their money.

By educating your clients on the importance of proactive financial planning, you can open up an endless amount of opportunities for your relationship to thrive.

This brings us to the third (often skipped) stage of the client journey: “Flourish.”

Turn Your “Fine” Meetings Into an Endless Stream of Client Wins

In the last stage of her “Fix, Fine, Flourish” framework, Lurtz encourages advisors to take their check-in meetings from mere progress monitoring to “Flourish Meetings,” where you prioritize the client’s discovery, reflection, and growth.

An easy way to make this pivot is by asking your client reflective questions that delve into their evolving goals and aspirations:

• What significant changes have occurred in your life or business since our last meeting?
• What changes would make you feel more fulfilled?
• What are the biggest challenges in your business today?

Come prepared with a library of solutions to propel your clients toward their goals. Here are just a few that our top advisors have used to “wow” their clientele:

1. Client Goal: “I’d like to retain my talent for as long as possible.”

Financial Advisor Solution: “Small businesses have to get creative to compete with larger companies’ salaries and benefits packages. Have you heard about student loan matching?”

SECURE 2.0’s student loan matching provision is a game-changer for business owners. Employers can now match employee student loan payments with 401(k) contributions, even if the employee isn’t contributing themselves. This tackles the tough choice between paying down debt and saving for retirement.

Employees will love the early start to retirement savings and increased financial security, and employers will love the boost in talent retention and employee morale.

2. Client Goal: “I wish I had better retirement planning options for myself, but it is what it is.”

Financial Advisor Solution: “Actually, there’s an excellent option for business owners that I don’t think we’ve discussed yet. Have you heard of cash balance plans?”

Cash balance plans promise a specific benefit amount at retirement, which can be taken as a lump sum or moved into an annuity for regular monthly income. The employer makes all contributions based on an actuarial formula (percentage of pay or a fixed amount). Employees don’t contribute.

This is often favored by business owners due to potentially higher contribution limits than traditional defined contribution plans. Plus, it can be combined with a profit-sharing 401(k) plan to benefit all employees.

If you want to learn more about cash balance plans (and earn CE credit for it), register for our upcoming webinar with NAPA on April 2, 2025.

3. Client Goal: “I wish I could find more quality hires.”

Financial Advisor Solution: “Fifty-seven percent of millennials said they’d feel less stressed if their employer offered financial wellness benefits. Have you heard of Roth employer matching?”

Roth employer matching is a powerful option for business owners looking to attract younger employees who anticipate higher future incomes. It allows employees to contribute after-tax dollars, ensuring tax-free growth and withdrawals in retirement.

Want More Ways to Help Your Clients Flourish?

By embracing the “Fix, Fine, Flourish” framework, encouraging your clients to think proactively about their finances, and offering a variety of services to reach their goals, you can transform “fine” clients into engaged, loyal partners.

If 401(k) offerings aren’t in your reengagement library yet, contact us. We’d love to help you overdeliver to your clients through every step of your relationship.

The post Why Happy Clients Ditch Their Financial Advisors (and 3 Ways to Re-Engage Them) appeared first on Fast and Affordable 401k for growing businesses.

Did you know there are over 150+ acronyms in the retirement industry? This is where an advisor is at his best!

How Advisors Are Helping Individuals

The average American’s net worth is held entirely in their home equity and their retirement account. A financial advisor can support people with so many other priorities, like caring for an ailing family member, dealing with a personal disability or tragedy, managing a job loss, recovering from a natural disaster, or traveling to support family in distant locations. The advisor is the lifeline, the quarterback/chef/conductor, the peace-of-mind maker, the retirement translator, who acts in the best interest of the client, answers the “when in doubt” questions that pop up, and so much more. 

Depending on the service model, a financial advisor may be able to assist with chat, phone, email and onsite meetings to make sure you maximize the value of the retirement plan benefits you offer your team. And, using experienced financial planning, advisors can take a holistic approach to client assets, helping both business owners and employees set proper goals and personalize their retirement experience.

4 Big Value-Adds

Including a financial advisor on your 401GO retirement account can benefit you in several ways.

Navigate Uncertainty: An advisor can help you avoid hitting the panic button during uncertain times. Too many workers buy high and sell low, or take early withdrawals or loans that come with penalties and fees. A good advisor will present other options.

Monetary Life Coach: An advisor can act as a financial life coach, helping you through the ups and downs and curve balls that life throws at you and your business.

Better Outcomes: Advisors, on average, provide better outcomes, higher satisfaction, more engagement, higher deferral rates, and, as a result, happier employees. 

Holistic Approach: An advisor can help you bridge the gaps between your wealth, health, and retirement needs in a personalized way, and they can do the same for your employees.

401GO Supports Advisors

401GO is the partner that makes retirement easier for all three parties. We help the advisor to do their work in a frictionless and fluid way, with contact details, investment fund access and review, participant notices and billing flexibility. We help the employer to set up their plan in just 15 minutes and to manage ongoing needs in an efficient and hands-off way. We give the participant an easy-to-navigate user experience with free financial wellness tools and no transaction fees.

There are over 300,000+ advisors in the U.S. Make sure you’re working with one that partners with 401GO.

The post The Value of Including a Financial Advisor within a Retirement Plan appeared first on Fast and Affordable 401k for growing businesses.

Choosing the right Third-Party Administrator (TPA) to handle this filing on your behalf is worth every penny. A good TPA will ensure the form is completed according to requirements, to help you avoid penalty costs and additional work with the IRS, and they will ensure that administrative tasks are done according to the requirements of the plan.

What is Form 5500?

All companies that offer a 401(k) plan are required to file this form with the IRS each year. It serves as both a disclosure document for plan participants and as a compliance tool for the Department of Labor and the Internal Revenue Service. The form requires detailed financial and operational information about the 401(k) plan, including plan assets, participant counts, and adherence to applicable laws and regulations.

How a TPA Supports You

A TPA plays a vital role in managing the administrative aspects of compliant 401(k) plans. When it comes to form 5500, a knowledgeable TPA will ensure that the filing is done accurately and prior to the deadlines, which are strict. This will prevent unnecessary fines and regulatory inspections. Compliance regulations by ERISA and the IRS change frequently and oftentimes unknowingly by business owners, so having a TPA that is knowledgeable and current on these changes will ensure the filing is compliant. 

The main elements of form 5500 is the data that is required to represent the plan year and participation within the 401(k) plan. The collection of the data and financial reporting requires gathering and organizing of this information. TPAs are equipped to manage this so it does not have to be a burden on the business owner. If an audit does arise, having a TPA that can aggregate all plan data in an efficient and accurate manner will assist the company to navigate the process with minimal disruption.  

DIY Form Filing

When you choose to file the form yourself, or have a CPA help you, rather than utilizing a TPA, the lack of expertise could put you at risk of serious consequences. Compliance requirements are very stringent, and late or inaccurate filings could result in steep fines and penalties. Penalties can add up very quickly and can cost companies thousands of dollars. There’s also a possibility of audits and legal complications, which are hassles no business needs. 

Even without errors, the complexities of form 5500 take time and resources to complete accurately and can result in significant time away from your business.

Work with the Best

To make sure you choose the right TPA for your company’s needs, ask these questions: 

• Do you prepare and file form 5500 for your clients? 
• Do you sign the form or is that the responsibility of the business owner? 

Having a clear understanding of your role up front will help ensure all tasks are completed.  Nobody wants to play a finger pointing game with their CPA or recordkeeper about who was supposed to file it and did not. TPAs are the experts in this area. They have technology at their disposal to collect and report the data in a streamlined fashion. The TPA will provide support based and necessary guidance so the plan remains in compliance on all fronts. Hiring a TPA that handles all of the aspects of administration for your plan will reduce the risk of compliance issues arising. 

Making the decision to leverage a strong TPA like 401GO to file the company’s form 5500 is not just a matter of convenience—it’s a critical step toward ensuring compliance, reducing risks, and maintaining an appropriately managed 401(k) plan. By working with a trusted TPA, businesses can stay focused on what they do best while the TPA focuses on 401(k) administration and compliance.

The post 401(k) Compliance: Why a TPA is Essential for Form 5500 Accuracy appeared first on Fast and Affordable 401k for growing businesses.

These provisions are applicable to any client whose principal residence was in a federally declared disaster area or who sustained an economic loss by reason of a federally declared disaster. Examples of economic loss could include damage to personal property from fire, flooding, wind, or other causes; loss related to an individual’s displacement from home; and loss of livelihood due to temporary or permanent layoffs.  

How Disaster Withdrawals Work

A client can take $22,000 from all eligible retirement plans (401(k) plan, money purchase pension plan, section 403(b) plan, and governmental section 457(b) plan). A qualified disaster withdrawal from an eligible retirement plan must be before the date that is 180 days after the latest of

1. Dec. 29, 2022
2. First day of the incident period with respect to the qualified disaster
3. Date of the disaster declaration with respect to the qualified disaster

Your client may repay all or part of the amount of a qualified disaster recovery distribution to an eligible retirement plan if the qualified individual completes the repayment within the 3-year period beginning on the day after the date the distribution was received. If the distribution is repaid, it will be treated as though it were repaid in a direct trustee-to-trustee transfer so that your client doesn’t owe federal income tax on distribution. The 10% additional tax does not apply to any qualified disaster recovery distribution made to your client if repaid.

It is optional for employers to adopt the expanded distribution and loan rules. However, even if an employer doesn’t treat a distribution as a qualified disaster recovery distribution, your client may still do so through this form. However, it is important to note that your client’s employer must have a plan that is eligible for qualified disaster distributions. 

How Disaster Withdrawals Affect Taxes

Financial advisors should remind clients that any qualified disaster recovery distribution they receive should be reported on their federal income tax returns over the 3-year period beginning with the year of receipt unless they elect on Form 8915-F to include the entire amount in income in the year of receipt. The payment of a qualified disaster recovery distribution to your client must be reported as well on Form 1099-R.

To find out if your client was affected by a federally declared disaster and can use qualified disaster withdrawals, consult this list. Even in hard times, there are resources to help. 401GO will be there along the way to guide you and ensure your clients receive the care they need.

The post Understanding Qualified Disaster Withdrawals from a Retirement Plan appeared first on Fast and Affordable 401k for growing businesses.

What is ACA?

The Automatic Contribution Arrangement (ACA) is a policy or system implemented under SECURE Act 2.0 to ensure employees are automatically enrolled in retirement savings plans offered by their employers. Under ACA, a predetermined percentage of an employee’s salary is deducted and contributed to their retirement account unless the employee explicitly opts out or chooses a different contribution level.

Making enrollment the default option has a proven track record of increasing participation and helping workers build a financial cushion for their later years.

Who is Affected by ACA?

SECURE Act 2.0 was enacted on December 29, 2022, and this is the important date to keep in mind when determining if a plan is affected. All plans established on or after this date are impacted, unless:

• The company has been in operation less than three years
• The company has 10 or fewer employees (but once the 11th employee is hired, it will affect them)

If your plan was established before this date, you’re exempt.

ACA applies to all types 401(k) and ERISA 403(b) plans, including traditional, Safe Harbor and Starter-k plans. Non-ERISA plans are not affected.

What is Required?

New plans must enroll eligible employees automatically at a default contribution rate. While there is some flexibility in the default rate, it should fall between 3% and 10%, a decision that is made at the plan level and applied to all employees equally.

Additionally, contributions must automatically increase at the rate of 1% per year, until it reaches a predetermined rate, which must fall between 10% and 15%. If the auto-enroll default is 10%, then the auto-increase is not needed.

What is the ACA Deadline?

To comply with this new regulation, the ACA provision must be implemented on affected plans by January 1, 2025. Since this deadline has already passed, it’s important to act now to ensure your plan is compliant. New plans created in 2025 and beyond will have an ACA provision included automatically.

Remember, affected employees must be notified of the details 30 days prior to the effective date. Proactive planning is essential for a smooth transition.

401GO is Here To Help

Updating plans on 401GO is easy. If you’re an employer looking to understand how these changes might apply to your plan, reach out to us. We’ll be happy to talk through the regulations and how they can be valuable to your team.

The post Understanding the Automatic Contribution Arrangement (ACA) appeared first on Fast and Affordable 401k for growing businesses.

Here’s a breakdown of the most impactful changes coming in 2025:

1. Mandatory Automatic Enrollment for New Retirement Plans

Beginning in 2025, any 401(k) or 403(b) plans that were established after December 29, 2022 must include automatic enrollment for employees, unless they choose to opt out. The default contribution rate is typically 3%, with auto-increase of 1% per year up to 10-15%.

Automatic enrollment is proven to significantly boost participation rates, helping employees save for retirement. While it does place a requirement on employers to ensure good communication with employees, it was already a popular provision because of its impact on plan success.

2. Employer-Sponsored Emergency Savings Accounts

Employers will be allowed to offer emergency savings accounts linked to their retirement plans, providing employees with a flexible tool to handle short-term financial needs, reducing the need to borrow against retirement funds. This provision allows up to $2,500 to be contributed to these accounts, with a certain number of penalty-free withdrawals each year.

By offering emergency savings accounts, employers can address one of the biggest barriers to retirement savings: employees dipping into their retirement funds for emergencies. This feature can improve financial wellness and reduce financial stress among workers.

3. Expanded Catch-Up Contributions for Employees Aged 60–63

From 2025, employees aged 60–63 will be eligible to make higher catch-up contributions to their retirement plans, giving them an opportunity to accelerate savings as they near retirement. This new limit allows older participants to contribute up to 150% of the standard catch-up amount for maximum savings.

This provision is a valuable way to help older employees shore up their retirement savings. Employers should ensure their plans are updated to accommodate these increased contributions.

4. Student Loan Payment Matching Contributions

Employers will be able to treat employees’ student loan repayments as retirement plan contributions, making those repayments eligible for employer matching. This provision helps employees focus on reducing student debt while still building retirement savings.

This is a game-changer for attracting and retaining younger employees who are burdened by student debt. Employers that implement this feature demonstrate a commitment to addressing the financial challenges faced by their workforce, while supporting healthy financial habits.

5. Saver’s Match Replacing the Saver’s Credit

The Saver’s Credit, a tax credit for low- and moderate-income individuals, will be replaced by a Saver’s Match. The federal government will match 50% of an individual’s contributions to a retirement account, up to $1,000 annually. The match will be deposited directly into the retirement account rather than being issued as a tax credit.

This change provides low- and moderate-income employees with a tangible boost to their retirement savings. Advisors should consider how to communicate this benefit to eligible clients and ensure accounts are set up to receive these matches.

Looking Ahead

These 2025 SECURE Act 2.0 provisions are a significant step toward improving retirement readiness for workers across the country. Consider the potential benefits of adding some of these provisions to your existing retirement plan. By understanding these changes and preparing ahead of time, employers can build a solid strategy for providing maximum value to employees.

Need help navigating SECURE 2.0? Contact us today for expert guidance on updating your retirement plans for 2025 and beyond.

The post Navigating 2025 SECURE Act 2.0 Provisions appeared first on Fast and Affordable 401k for growing businesses.

We work hard to listen to our advisor partners, and have launched a cash balance education webinar series. the first episode will take place on December 11, 2024 at 1:30pm ET, followed by additional episodes every quarter for one year. Each will be an hour long and will include time for Q and A with 401GO’s COO Jared QKC, QKA and Head of Plan Operation Sue Hardy QPA, ARA — two of the leading experts in retirement planning.

The first episode is titled Cash Balance 101 and will approach the topic at an elementary level using plain language. Each subsequent episode will build upon the last, and all will qualify for CE credit.

This is your chance to become an expert on the cash balance plan: a topic that is growing in popularity despite being poorly understood by a significant number of advisors.

The post Announcing 401GO’s Cash Balance Plan Education Webinar Series appeared first on Fast and Affordable 401k for growing businesses.

As time went on, things improved bit by bit. Most notably with the creation of document signing technology and other similar services that effectively put office facsimiles out of their misery. But the retirement plan setup process didn’t really improve much beyond that with continued long setup timelines, multiple back and forth communications between client, provider and advisor and an overall antiquated process ignoring the benefits of readily available technology for all of us to use…until now. 

Efficient 401(k) Setup

Let me introduce you to one of the many benefits 401GO clients and advisor partners experience when taking their first steps with us—the easiest and most efficient setup process in the retirement plan industry! What makes 401GO’s setup process so easy and efficient for our clients and partners?

Time

• Initial setup steps that historically took hours to complete are now completed in as little as 15-30 minutes. Small business owners are almost always short on time and 401GO’s 401(k)setup process gives them back the gift of hours!
• 401GO’s entire setup process from initial step to first payroll contribution are completed in one business week.
• 3 month setup timelines? 6-8 week delays? 45 – 60 day deadlines and cutoffs? Not at 401GO. I personally helped my advisor partners and their clients setup six new Safe Harbor plans on Sept. 30th this year with plan effective dates of Oct. 1st. All in a day’s work at 401GO!

Efficiency

• All of the new plan documents are generated during the initial setup step and ready for client review and e-signature.
• Speaking of e-signature, with 401GO, the client only has to complete one e-signature for their entire new plan setup. Yep, you read that right. Only one e-signature.
• Once the client completes the e-signature step, the plan is immediately assigned their new dedicated Client Support Manager (CSM) who will then connect with the client within 48 hours and assist with the remaining onboarding steps and remain attached to the new plan as their dedicated CSM moving forward.

Ease of Use

• 401GO’s setup process is so easy and intuitive to use that it is designed for the advisor to invite their clients to initiate and complete the process on their own. Or, the advisor can complete the setup on their clients behalf and have it ready for signing in minutes!
• Commonly, the approach our advisor partners take is to sit down together with their client and help them complete the initial setup process together.
• The entire setup process is done online without a shred of actual paper – sorry Dunder Mifflin! 

A New Approach to 401(k) setup

So let’s recap what you don’t get with 401GO. No more 87 pages of paperwork. No more multiple signatures required as if the client was buying a new home. No more hours of a clients and advisors time spent on retirement plan setups. No more getting in line 6, 8 or even 12 weeks in advance to meet the vendors deadline and time frame. No more clients passed around like a hot potato during their new client experience. 

401GO is truly an advisor-centric platform built by small business people for small business people and their employees. Check us out for yourself and let our team show you firsthand. We have an amazing team from development to operations, from support to marketing and from compliance (yep – we even really like our compliance peeps!) to sales, all more than ready to make 401GO your preferred retirement plan partner. 

The post Everything Is Easy with 401GO – Especially the 401(k) Setup Process appeared first on Fast and Affordable 401k for growing businesses.

What is a SIMPLE IRA?

A SIMPLE IRA (Savings Incentive Match Plan for Employees) is designed specifically for small businesses with 100 or fewer employees. It’s an easy-to-administer retirement plan that is typically a low cost way for employers to offer retirement benefits.

• Contribution Limits: In 2024, employees can contribute up to $16,000, with an additional $3,500 in catch-up contributions allowed for those aged 50 or older.
• Employer Contributions: Employers are required to contribute to the plan. They can either:
  1. Match up to 3% of the employee’s salary, or
  2. Make a flat 2% contribution for all eligible employees, regardless of whether the employee contributes.
• Simplicity: One of the biggest advantages of the SIMPLE IRA is its ease of administration. It requires minimal administration, making it an attractive option for small businesses.

However, there are also some drawbacks:

• Lower Contribution Limits: The contribution limits are lower than those of a 401(k), which may limit the amount owners and employees can save annually.
• No Loans Allowed: Employees cannot take out loans from a SIMPLE IRA, which reduces its flexibility in case of financial emergencies.
• Withdrawal Penalties: Early withdrawals within the first two years of participation are subject to a steep 25% penalty, which drops to 10% after that period.
• Lack of Flexibility: Fixed employer contribution amounts and immediate vesting limit the options for designing a plan.

What is a 401(k)?

A 401(k) is a more flexible retirement savings plan fit for businesses of all sizes. It allows for higher contribution limits and more customization, but it does come with potential higher administrative costs and complexity.

• Contribution Limits: In 2024, employees can contribute up to $23,000, with an additional $7,500 in catch-up contributions for those aged 50 and older. These higher limits allow employees to save faster for retirement.
• Employer Contributions: Employers have the option to contribute to the plan but are not required to. If they do, they can choose from various matching formulas. Employers can set a vesting schedule for the match, meaning employees gain ownership of these funds over time rather than immediately, as in a SIMPLE IRA.
• Plan Flexibility: 401(k) plans offer much more flexibility, such as the ability to take out loans against the account balance that they pay back to themselves over time. This feature can provide employees with access to funds in times of financial hardship.
• Complexity and Cost: Administering a 401(k) can involve more complexity and higher costs compared to a SIMPLE IRA. Businesses may need to conduct annual compliance testing and provide regular reporting, which can be costly and time-consuming. Luckily, 401GO eliminates the administrative burden and makes 401(k) plans easy to offer and manage.

Ready to learn more? Let’s talk.

 SIMPLE IRA and 401(k): Which Retirement Plan is Right for You?

Both the SIMPLE IRA and 401(k) offer significant retirement savings benefits, but the right choice depends on the needs and size of the business, as well as the savings goals of the employees.

• SIMPLE IRA is ideal for small businesses looking for a low-cost, easy-to-administer plan. The mandatory employer contributions ensure employees receive some retirement benefits, even if they choose not to contribute themselves.
• 401(k) is better suited for businesses that want to offer more flexible savings options, higher contribution limits, and plan customization, such as the ability to take loans or implement a vesting schedule. The benefits of increased savings potential and flexibility can give a business a plan specifically designed to meet its needs.

Conclusion

Choosing between a SIMPLE IRA and 401(k) is an important decision for both employers and employees. Each plan has its own set of benefits and limitations. For small businesses that want simplicity and lower costs, the SIMPLE IRA may be the best fit. On the other hand, businesses that want to offer their employees more flexibility, higher contribution limits, and a customizable plan will find the 401(k) more advantageous. In the end, the choice depends on the business’s needs, budget, and how much employees wish to contribute toward their retirement. To learn more and get a sense for whether your specific circumstances are better suited to a SIMPLE IRA or 401(k), schedule a meeting with me and we can discuss it together.

The post SIMPLE IRA and 401(k): Understanding the Key Differences appeared first on Fast and Affordable 401k for growing businesses.