Hesitation is common and understandable, but implementing a 401(k) plan can be a game-changer for your business. Let’s talk through some of the key benefits and challenges of offering a 401(k) plan, and how 401GO is upending the industry to make it much less painful.

The Benefits

Around ⅔ of American companies offer a retirement benefit to their employees. What makes it so valuable to these businesses?

• Attracting and retaining top talent: In today’s competitive job market, top candidates are looking for more than just a good salary. According to Forbes, retirement plans are the third most important benefit to employees, after only healthcare and life insurance. A 401(k) plan can significantly boost employee morale and loyalty, leading to higher retention rates.

• Tax advantages for the company: Tax benefits are one of the most compelling reasons to offer a 401(k). Contributions you make to your employees’ accounts are tax-deductible, reducing your overall tax liability. And, your startup may qualify for tax credits to offset the costs of setting up and administering the plan.

• Long-term financial security for employees: For a startup, 401(k) plans can reduce employees’ stress and improve their productivity. Knowing that they have a solid retirement plan can allow employees to focus more on their work and contribute more effectively to your company’s success.

The Challenges

Young and small companies have unique needs, making a retirement benefit feel out of reach.

• Initial setup costs: Setup expenses such as fees for plan design, legal services, and setting up administrative processes can be a barrier of entry for many small businesses and startups.

• Ongoing administration: For a startup with limited resources, the ongoing responsibility of managing employee contributions, handling plan documentation and employee notifications can be daunting.

• Regulatory compliance: 401(k) plans are subject to strict regulations and compliance requirements set by the IRS and the Department of Labor. Keeping up with these regulations demands a thorough understanding and diligent management, which can be challenging for a small team.
• Financial strain on a growing business: Balancing the desire to provide attractive benefits with the need to maintain financial stability is a common challenge for many startups.

The Good News

There are ways to alleviate the challenges that businesses face when offering a 401(k) plan, and in some cases, removing them altogether.

First, choose the right plan provider. Look for a provider who offers comprehensive services, including plan setup, administration, and compliance support. 

Next, minimize costs by starting with a basic 401(k) plan that meets essential requirements. You can always enhance the plan’s features as your startup grows. 

Last, leverage technology to simplify plan administration. Look for plan providers that offer user-friendly online platforms for managing contributions, compliance, and reporting.

Consider using 401GO as your retirement plan provider. Built for small businesses, we handle all administration, recordkeeping, and compliance for the plan, effectively eliminating the admin burden for the business owner. We offer a wide range of plan types to accommodate your circumstances, and our setup time is an astounding 15 minutes. Competitive pricing saves you thousands of dollars compared to legacy retirement providers. And, our technology is second to none. The 401GO platform is heavily automated and easy to use, which drives down costs for small companies.

With 401GO, you can maximize the benefits of offering a retirement plan while minimizing the challenges that you will face. The decision to offer a 401(k) plan should be based on a careful assessment of your startup’s resources and long-term goals. With thoughtful planning and execution, a 401(k) plan can become a valuable asset for your business, helping you build a motivated, loyal, and financially secure team.

The post Why Your Startup Needs a 401(k) Plan Today appeared first on Fast and Affordable 401k for growing businesses.

Here in Utah, the first week in October is usually when fall leaves are at their most colorful. Students are already bored with their new classes. The days average a comfortable 70 degrees while nights get chilly and sweaters are required. That feels a long way off from a mid-July day like today, with kids at play, sunflowers in full bloom and the mercury threatening to break 100 well into the foreseeable future.

So why are all the other 401(k) providers getting all worked up on social media, saying it’s urgent that the process of creating a new safe harbor plan must begin immediately if that distant deadline is to be met? Is it possible their calendars are broken?

One post in particular actually features video of a plan consultant on a sweltering golf course warning, “We need signed paperwork by August 30th. A lot of the record keepers actually need signed paperwork by mid-August…in order to be a safe harbor plan. I know a lot of people have been enjoying their summer, but deadlines are coming up!”

How fast can 401GO set up a safe harbor 401(k) plan?

It’s all a bit foreign to us at 401GO because our technology and automation can get a safe harbor 401(k) set up in about 15 minutes. That means we’d be safe if we started posting gentle deadline reminders around noon on September 30th.

The difference is, the others use the outdated legacy technologies that actually do require weeks and sometimes months to accomplish what we can in less time than it takes to mow your back yard.

So do enjoy your summer, take your vacation and come see us when the kids are back in school. That’ll be more than enough time to get your safe harbor 401(k) plan set up, with all the many benefits that entails, including significant tax advantages and reduced administrative burden.

If you would rather get that conversation started today, we’re up for that, too.

The post Enjoy Your Summer: 401GO Can Set Up Your Safe Harbor 401(k) in Minutes appeared first on Fast and Affordable 401k for growing businesses.

Must You Offer Employees a 401(k)?

The short answer is no, at this point, there are no federal laws requiring employers of any size to offer a 401(k) plan to employees. However, there are some states that require businesses to either offer a retirement plan to their employees or use a state-sponsored program. While a 401(k) is the most popular plan type, other retirement plan types are also available.

Most of the state-sponsored programs are Roth IRAs (Individual Retirement Accounts), not 401(k)s, and although both are retirement savings vehicles, there’s a world of difference between them. Let’s take a look at each.

What Is an IRA and How Does It Work?

You might think you know the answer to that question, especially if you have one, but you might be wrong. An IRA is a personal retirement account (remember: the “I” is for “Individual”), previously used more often by those who had no access at work to a 401(k). An IRA is a private nest egg, and only the account owner makes contributions.

What Is a 401(k) and How Does It Work?

A 401(k), a popular retirement vehicle that over time has largely replaced pensions, is available only through employers. The IRS sets lots of rules about which employees companies can and cannot bar from participating in the 401(k) plan. Generally speaking, full-time employees are allowed to participate in a 401(k) plan if their company offers it. According to a CNBC survey, about 40% of people do not avail themselves of this benefit, but that is employees’ choice to make.

401(k) vs. IRA

Why is the 401(k) considered the gold standard of retirement accounts? Because employees can save so much more in them. The maximum employees can save in a 401(k) in 2024 is $23,000, while the IRA max is a paltry $7,000. Additionally, many employers offer matching funds, contributing a percentage on the dollar of whatever the employee contributes. No one gets matching funds with an IRA.

That being said, some employees have their own IRA even while participating in a company-offered 401(k). Not everyone has an extra $30K to sock away every year, but there are other ways of managing to fund two types of accounts. Employees’ first priority is often to contribute a percentage that maximizes the employer match. For instance, if the employee earns $100K and the employer offers a match up to 6%, the employee should prioritize saving at least $6,000 to get the full amount of matching funds. After that, any extra money could be put in either the 401(k) or the IRA. 

Why bother opening an IRA? If the employer doesn’t offer a Roth option with their 401(k) plan, employees might want to open a Roth IRA so that they have some retirement savings they can eventually withdraw tax-free. Additionally, many 401(k) plans do not offer as diverse a selection of funds in which to invest as an IRA does, if investors are paying attention to that type of thing. 

So to recap, 401(k): Good, IRA: Not Bad.

Where Are Retirement Accounts Mandated?

Today, many states are mandating that employers offer retirement accounts to employees. There is even a House bill that is seeking to make retirement accounts mandates federal. But, this would mandate the use of any type of retirement plan, not 401(k)s specifically. This is important because there are many retirement vehicles available to small businesses, so it still preserves the freedom of choice.

The truth is that about half of U.S. workers have no access to a 401(k) plan at work, and many of these workplaces are small businesses. This shortfall was the catalyst for the birth of government mandates — an attempt to get more U.S. workers to save more for retirement.

One issue standing in the way of small businesses offering 401(k)s has been that these plans were historically expensive and time-consuming to operate, making them impossibly unaffordable to small-business owners. Now, 401GO provides easy setup and affordable management of 401(k) plans, making them an excellent — and allowable — alternative to state-sponsored IRA plans. A 401GO 401(k) is better because state IRAs are nothing more than regular IRAs that employees get through work. They’re better than nothing because they are easy to get and encourage employees to save, but at the same time they cause problems, because in most states these IRAs are not only offered — employees are automatically enrolled in them. If they don’t read the fine print and don’t realize they have an IRA until they notice money missing in their paychecks, it’s hard to get this money back, causing a myriad of additional problems.

While most companies that offer 401(k)s do the same, automatically enrolling employees in the plan at a 3% contribution rate, the enrollment and opt-out processes are much better when using 401GO. 

Where Are Retirement Accounts Mandated?

California, Colorado, Connecticut, Illinois, Maine, Maryland, Oregon, and Virginia have retirement plan mandates, while Delaware, Hawaii, Minnesota, Nevada, New Jersey, New York and Vermont have passed legislation to mandate retirement plan offerings. Washington, New Mexico, Missouri and Massachusetts offer voluntary plans with no mandates. Other states have votes coming up on the matter, and still others are considering legislation.

Even if you live in a state where the mandate has passed and is in effect, it can be difficult to know if the mandate applies to you. In some instances, the mandate applies to small businesses with 5 or more employees. Elsewhere the number may be lower. It’s important to keep an eye on the law and watch for any changes that might occur. If you have a financial advisor or a good accountant, this person might take care of this task for you.

Even though 401(k) plans are not mandatory, it’s still important for business owners to be aware of the laws in their state. Offering a good, affordable 401(k) from 401GO now could save you a lot of headaches in the long run.

The post Is Offering a 401(k) Mandatory? appeared first on Fast and Affordable 401k for growing businesses.

That’s not because those things aren’t important; it’s because 401GO has built-in fintech solutions that make these considerations moot. 

Let’s start with the considerations you will want to make.

1.   Financial Stability

Before you seriously consider sponsoring a 401(k) plan for yourself and your employees, assess the financial stability of your business. Implementing a 401k plan can involve a number of costs such as employer contributions and administrative fees. While you should ensure that your business has the financial capacity to sustain these expenses in the long term without compromising other critical operations, if you work with 401GO, many of your administrative costs will be much lower than average. Additionally, new businesses that start a 401(k) may be eligible for a tax credit of up to 100% of startup costs up to $5K a year for the first three years.

2.   Business Growth

Most small businesses start with either very few employees or none. If the business is successful and grows, it may require more employees to help run it. This is the stage at which many small-business owners start to think about offering a 401(k). It’s the time when you can make better predictions about the future, forecast earnings more accurately and be more reasonably certain that you will be able to sustain such a program.

3.   Employee Retention

Once you have employees, you’ll want to keep them — the good ones at least. Most people know that the way to keep any relationship, in the workplace or otherwise, is to work to ensure that the other party is happy or at least content with the situation as it is. While there is definitely a wide variety of what employees and employers consider necessary and acceptable in an employee/employer relationship, there are a few things that most people agree are important. These include compensation, workplace environment/culture and benefits. If you fall short in one of these categories, the other two won’t matter much. No one will want to stay at a job where they are paid well and have great benefits but are yelled at, overworked and harassed. We’ll leave you to manage compensation and environment and focus only on benefits — a 401(k) program specifically. 

A 401(k) plan is mentioned continuously by workers as one of the most important benefits an employer can offer. So if you want to keep your employees (and especially if you want to keep them away from the competition), consider sponsoring a 401(k) program at your company.

4.   Legal and Regulatory Environment

Stay informed about retirement plan regulations and any legal obligations imposed on employers, or work with a financial advisor who can do this for you. It’s important to stay in the know about federal and state laws related to retirement plans, such as reporting requirements, contribution limits and compliance obligations. Ensuring that your business can meet these obligations helps to avoid potential penalties or legal issues.

If you work with 401GO, here’s what you won’t need to worry about:

1.   Administrative Considerations

Many small-business owners need to tackle the jobs of evaluating the administrative requirements and responsibilities associated with managing a 401(k) plan. Not so with 401GO. We have fintech solutions that make quick work of many of these tasks, all with zero effort from you. You won’t have to worry about whether your business has the resources, time and expertise to handle plan administration or even the cost of outsourcing these responsibilities to a third-party administrator — we’ve got you covered.

2.   Employee Communication

Depending upon whom you choose as your 401(k) plan administrator, you may need to put in time and effort to communicate with employees about the new retirement benefit and notify them of their eligibility to participate. It’s important to know who is eligible to participate and who is not, and to provide them with the info they need to decide about investment options and contribution levels. At 401GO, we can help with participant onboarding and notification, so you don’t have to go it alone.

Before moving forward, do these:

Create an Employer Contribution Strategy

If you are able and willing to make matching contributions to your employees’ accounts, determine how much this amount should be. Matching contributions aren’t mandatory, but they can incentivize employee participation and increase the value of the plan. Analyze your budget and align your contribution strategy with your business’s financial goals.

Do Market Research

Research and compare retirement plans offered by other businesses in your industry or region so you can understand the prevailing market practices and benefits packages provided by competitors. This can help you determine if offering a 401(k) plan is a competitive advantage or an industry norm that you need to match.

Determine Plans’ Design Flexibility

Consider the flexibility and customization options available in 401(k) plan design. Evaluate whether the plan can be tailored to meet your business’s specific needs and align with your company culture. Having a plan that can adapt to your changing needs can make it more suitable for implementation.

Seek Professional Guidance

For help making important decisions, look to retirement plan specialists, financial advisors or HR consultants who can provide insights into the specific considerations for your business. They can help you navigate the decision-making process, assess the financial impact and ensure compliance with regulatory requirements. 401GO partners with top financial advisors across the U.S. — ask us for a recommendation for a financial advisor in your area.

The post Is It Time for Your Small Business to Offer a 401(k)? appeared first on Fast and Affordable 401k for growing businesses.

That’s why we have laid out for you five ways you can reduce your payroll taxes legally. Think of these strategies along the lines of the hacks you might see on social media about how to peel garlic faster, how to get super glue off your hands or how to convert a Word doc to a pdf. Why struggle or suffer if you don’t have to?

1.       Find out which tax credits you’re eligible for.

If you’re thinking that finding out what tax credits you can take is a job in itself, you’re not wrong, and if you have an accountant or financial advisor, absolutely lean on them to perform this task for you. But it doesn’t hurt to be informed on the topic yourself, whether you have a professional on your side or not.

For instance, are you familiar with the Work Opportunity Tax Credit? This IRS program provides tax credits to employers who give jobs to certain segments of the population who may be marginalized. Examples include convicted felons, disabled people and veterans. This program has done a lot of good in communities across the U.S., giving former prisoners an acutely important second chance at life, and allowing individuals who may not be suited to skilled labor the opportunity to contribute to society through work such as collecting shopping carts, stocking retail items or other types of jobs they may be well-suited to, be it part time or full time. Employing such people is a win-win — you get a tax credit while helping someone earn money and feel better about themselves.

2.       Offer access to flexible spending accounts.

Employees can only participate in an FSA through their employer, so it is a crucially important benefit. But it’s not only the employees who benefit — it applies to employers as well.

Currently, the IRS allows for three types of FSAs — two for health care and one for dependent care. Employees may designate a certain amount of their pretax income to be funneled into a separate account to pay for uncovered expenses such as prescription medications, doctor visits, eyeglasses, dental care, caregiver expenses, summer camps and more. Employers that offer these programs at their business are eligible for reductions on the payroll taxes they must pay for workers who contribute to these accounts. Employers are exempt from paying Medicare and Social Security tax on every dollar that employees divert to their FSA. You may not get rich on this benefit, but every little bit helps, and when you offer these programs, you have the bonus of providing employees a valuable benefit (and hopefully their appreciation for doing so).

3.       Take a closer look at your employee classifications.

In recent years, the labor force has seen an uptick in the number of workers classified as independent contractors, rather than employees. Classifying workers as ICs can save employers a ton of money in taxes, benefits and administrative costs. Employees need to be trained, onboarded and (usually) provided a space in which to do their work. ICs often work from home and already have the skillset necessary to complete the work. Using ICs gives employers flexibility to pay workers only when they need work done, versus 40 hours per week.

Plus, they save tremendously in not paying benefits such as health insurance, vacation and sick days. Additionally, employers do not have to pay their 7.5% share of Medicare and Social Security tax — the ICs are responsible for paying these themselves. Sounds like a dream, right? Many employers thought so, and that’s how it turned into a nightmare for them.

Classifying workers as ICs comes with a list of requirements, and if your ICs don’t meet these requirements, you could be looking at fines into the hundreds of thousands of dollars. For example, if you want to classify a worker as an IC, you can’t require them to be on your premises during any pre-set hours. You also can’t pay them by the hour — they must be paid by the project. These are only two examples — classification rules are extensive.

So while you can save lots of money classifying workers as ICs legitimately, you can lose a lot of money by doing it nefariously. If you’re not sure how to classify your workers, get the advice of a professional.

4.       Offer retirement plans.

Offering retirement plans is a great way to attract top talent to your industry and business, but these plans don’t only benefit employees — they benefit employers too. For instance, employer matching contributions are tax deductible. Employees appreciate employer matching contributions, and they won’t cost you as much as you thought when you factor in the tax credit.

Additionally, you can get tax credits of up to 100% of your administrative costs for three years if you don’t already have a retirement plan in place. Because these costs can sometimes be higher than a small-business owner counted on (and the timeline for getting the plan up and running can be long), 401GO offers easy and low-cost startups for retirement plans for small businesses.

5.       Stay updated on changes to tax laws.

You can do this by subscribing to reliable small-business publications, joining your local chamber of commerce or working closely with a financial advisor or certified public accountant. Some small-business owners love staying up to date on important developments in their industry or the administration of their business, while others prefer to focus on day-to-day operations or creative brainstorming sessions. There’s no one right way. Whether you rely on yourself or someone else, make staying abreast of how tax laws affect your business a priority.

Protect Your Profits

While more money doesn’t necessarily lead to greater success or happiness, it can make it easier. And when you pay less in taxes, you have more cash on hand — money that can be used to reinvest in your business, reward loyal employees, fund a local youth sports team or pay for a well-deserved vacation. Count on 401GO for great advice about how to improve the bottom line at your small business.

The post 5 Ways SMBs Can Reduce Payroll Taxes appeared first on Fast and Affordable 401k for growing businesses.

1.       A Long and Arduous Setup Process

One of the most off-putting aspects of selecting a 401(k) plan administrator and setting it up is the time it takes. According to ADP, one of the country’s largest payroll processors, it takes 30-45 days to set up a 401(k), and 60-65 days to switch plan administrators. This is just their estimation, however; it can sometimes take even longer.

ERISA laws mandate that any company sponsoring a 401(k) plan select a plan administrator. Traditionally, these have been investment firm giants like T. Rowe Price and Charles Schwab. As you can imagine, if you choose one of these firms as your plan administrator, you will likely not be one of their most important customers. That’s not to say they won’t treat you fairly, just that how busy a plan administrator is can be a factor in how long you have to wait to get your plan set up.

At 401GO, we have mastered the art of the quick setup. You can start your 401(k) plan in as little as 15 minutes. How do we do it? Our system was designed to understand the needs of small companies. It will ask some questions about your business, your employees and your preferences, and it will use these to suggest the best plan design.

The difference is conceptual. Small companies and big corporations have different needs. The big guys have their big plan providers, and you have 401GO.

2.       Tracking Eligibility and Sending Employee Notifications

If you thought setting up the plan was a headache, that’s nothing compared to the ongoing administration. Small-business owners must make employees aware of who is eligible to participate, and then ensure that deductions are made each pay period and that the contributions are deposited correctly and in a timely manner.

Most businesses have 15 days to deposit your contribution into your account, seven days if there are fewer than 100 plan participants. Failure to do so can result in fines and penalties, and even imprisonment. It’s easy for HR or your accountant to make a mistake, and usually penalties are less severe for honest mistakes, but it’s still nerve-racking to think about.

When you work with 401GO, you don’t have to worry about tracking eligibility, making correct and timely contributions or sending employee notifications — we do it all for you. We’re the set-it-and-forget-it of 401(k) plan administrators.

3.       Filing Required Annual IRS Forms

The most important IRS form required for small businesses that sponsor 401(k) plans is Form 5500. Form 5500 requests information that shows that small businesses are following ERISA laws. This includes demonstrating the plan’s qualifications and operations, as well as its financial condition and what investments have been made. We take care of this for you because we have all this information right at our fingertips, and we are well-versed in filing Form 5500.

You probably know that mistakes made on any IRS forms can lead to unpleasantness, but mistakes made by small businesses are a much bigger problem than mistakes made by individuals.

Additionally, wage and tax statements may be necessary as well as Form 990 and Form 945. We take care of all of these.

4.       Managing Loans and Distribution Requests

So much of managing a 401(k) is about payroll deductions and account deposits that some small-business owners forget about distribution, thinking of it as far down the road. And it can be, but the goal is for everyone to get there. How are distribution requests handled? Suffice it to say that we handle them — you don’t even have to think about them. As your employees reach retirement age and are ready to draw on the funds they spent so many years accruing, we’re here to take care of that.

If any of your employees need loans, we can handle that as well. It’s not unusual for investors to look to their 401(k) to help finance major expenses like a home down payment, college tuition or some type of emergency. It’s best to let a 401(k) grow without it being disturbed, but it’s not always possible. And when your employees need a loan, we’re there to manage it for them.

5.       How to Deal with Problems

We make it sound easy to become a 401(k) plan sponsor, and that’s because it is. But only because we work so hard to make it so. We have many collective years of experience in the finance and tech industries, and that’s how we were able to conceive of a better way to start a 401(k), and to make it happen for small-business owners across the country.

But that doesn’t mean you won’t ever have questions or concerns about your 401(k) plan and how it operates. And we’re here to answer those questions for you. We are known for our responsive, attentive customer service, and our clients both rely on us and trust us to provide timely answers and solutions. Get started with your 401(k) plan with 401GO today.

The post Top 5 Things You Won’t Worry About with a 401(k) from 401GO appeared first on Fast and Affordable 401k for growing businesses.

Let’s discuss what’s really important to today’s employees.

1.       Money

A competitive salary speaks louder than almost any other aspect of employment. That’s because money is the main reason people work. Sure, some people work to keep themselves busy or for the prestige that goes along with their job (or the health insurance), but most people exchange their blood, sweat and tears for cold, hard cash they use to pay their rent or mortgage and put food on the table.

For this reason, you have to stay abreast of what the standard is in your field and in your area, and what your competitors are paying. If you fall behind, you run the risk of losing your best employees to other companies that pay better — or you may never even get the chance to hire a truly good worker.

If you aren’t located in a big city, this could greatly impact your business’s success and growth. You could become known early on as cheap, and smart workers will avoid you. Pay your employees fairly if you want them to stay, and pay them well if you want them to be happy about staying.

2.       Positive Working Environment

Having a bad boss or a stressful working environment has been consistently ranked as one of the top stressors in life, right up there with divorce, death and serious illness. And no wonder — most of us spend 40 hours a week working, and if you’re subjected to micromanagement, bullying, harassment or worse, those 40 hours could seem like 400. No money is worth that type of stress, and it’s the biggest reason employees quit.

It’s important to treat your employees with respect, but you must ensure that your employees treat each other with respect as well. Not only is it the right thing to do, but failing to protect employees from sexual harassment or harassment due to race, gender, sexual orientation or a host of other qualities and factors can open you up to a lawsuit.

Apply the golden rule with your employees, as you do in life, and treat them as you would want to be treated. Give them autonomy, allow them a good work/life balance and don’t pressure them to produce more than is reasonable.

3.       Paths for Advancement and Growth

Dead-end jobs are so named for a reason — once you get them, you’re stuck. Even before you hire an employee, think about ways their role at your company could expand over time. You don’t necessarily need to reveal these ideas during the job interview, but it’s good to be prepared in case anyone asks. Additionally, once you hire an employee and see them in action, your ideas about how their job could shift might change. They may have ideas of their own as well.

Once you establish good and trusting relationships with your employees, you may even want to invest in their education, helping to pay for them to get additional training, certificates or even another degree.

Employees want to feel valued, and one way to help ensure that happens is to give them added responsibility, along with better compensation, a new title and maybe even their own office.

4.       Benefits

Benefits are critically important to most employees, and almost all full-time employees. Living in a nation where healthcare is far from guaranteed — almost 10% of Americans have none —  most workers depend on their employer for this all-important avenue to staying alive and well.

Vacation days — or paid time off — is also in short supply throughout the U.S., so providing your employees time for rest and relaxation is definitely appreciated.

Also prized: retirement plans. The idea that saving for retirement is a luxury few can afford has become antiquated. A little more than half of U.S. workers have access to a retirement plan like a 401(k) at work. That’s a pretty dismal statistic, when you consider that so much of retirement income goes to supplemental health insurance and prescription meds. A major roadblock has been the time and expense associated with sponsoring a 401(k) plan for employees, making it all but unaffordable for small-business owners.

That’s where 401GO comes in. We work with small-business owners, helping them to set up a 401(k) in minutes instead of weeks or months, and the fees are nominal. If you think this sounds too good to be true, you can read about us in U.S. News & World Report. We’re here to help you help your employees (and yourself) save for retirement. Browse our site today and see how easy it is.

The post How to Retain the Best Employees appeared first on Fast and Affordable 401k for growing businesses.

What Are You Looking For?

While this is a broad question, and you may think the right answer lies outside your area of expertise, it is still important to consider before you start your search. What made you decide that now is the time to consider sponsoring a 401(k) plan? Did your employees request it? Did you lose a few good employees to competitors that offered better benefits such as a 401(k) plan? Have you always wished you could do it but never thought you could afford it? 

Understanding your motivations will help you narrow your focus and better determine what you are hoping to achieve by making this change.

At the very least, compile some basic information about your workforce, such as how many eligible employees you expect to have and other important demographics such as their ages (how close to retirement they are can matter), their income (contributions are often done in percentages, and if you’re offering matching contributions, your employees’ salaries will help determine how much you pay out) and other relevant information.

If you’re near the 100-employee mark, maybe do an informal poll to find out how many employees would participate if you offered a 401(k) plan. Having 120 or more plan participants can trigger the need to perform annual audits, unless you go with a Safe Harbor plan. At the same time, depending on the type of plan you choose to offer, having high employee participation can be beneficial, since the more employees you have in the plan, the more you and your highly compensated employees can contribute to your own retirement savings.

It can be difficult for many small-business owners to determine ahead of time what type of 401(k) plan they want to sponsor. That’s because you may not know much about what your options are. Reading up on all of them until you are adequately informed could take months, and you want to put your time and effort into your business. At the same time, you don’t want to shirk the responsibility that comes with making decisions about your employees’ retirement plans.

One great option for quickly getting the information you need is to consult a financial advisor. If you don’t already have one, however, the search to find a good one might not be that different from your search for a 401(k) plan provider. What you definitely want — whether it’s a financial advisor or a 401(k) plan provider, is someone who knows their stuff.

How to Refine Your Search for a 401(k) Provider

The way many people make important decisions in life is by relying on their network for advice. Whether that’s work associations, personal friends, family members or others, getting a recommendation is a great place to start. While it can be useful to do research on third-party review sites, the information you get there should always be taken with a grain of salt. Dissatisfied customers are always more motivated to post than satisfied ones, and some people are always dissatisfied no matter what. When you start with a recommendation from someone you know and trust, you’re in a better position.

Once you get a few names, do your own background checks on the ones you like, seeing if they are properly certified and accredited, and if there are any complaints against them on sites like the Better Business Bureau. Check their ratings on review sites like G2, and dive into the details.

Like with any other selection process, set up appointments with the 401(k) providers you are considering. Be sure to ask about what types of plans they recommend for you based on your wants and needs for your company and employees — hopefully the answers will be about the same from each one, and you will get a better understanding of what is right for you. Then you can find out about what types of features and customization services they offer (such as investment options and fund choices), and this could be the clincher. Remember to ask about their cost and fee structure as well — administrative fees, investment fees and other charges can add up.

We offer a buyer’s guide to help you compare 401(k) fees — just ask!

Other Considerations with 401(k) Providers

You may also want to ask potential 401(k) plan providers about the type of technology they use and how easy it would be for you and your employees to use their features to manage your accounts. Additionally, you may want to determine the level of support you can expect to receive with respect to using mobile access, record-keeping and reporting, compliance and any other aspect of plan administration you may be concerned about.

Many small-business owners are drawn to 401GO because setup is so easy and fast, and administration is a snap. We have been around since 2018, and you can read about us in U.S. News & World Report, among other publications and review sites. 

Could 401GO be right for your small business? Give us a call and find out!

The post Choosing a 401(k) Provider for Small Businesses appeared first on Fast and Affordable 401k for growing businesses.

Since the more participants you have, the better your plan works, we want to go over with you some ways in which you — or your financial advisor — can encourage and successfully convince employees to participate in your 401(k) plan.

Why Should Employers Care About Participation Levels?

At the most basic level, the best reason to care about whether your employees participate in the 401(k) plan you sponsor is because you want them to make good, sound financial decisions for themselves, and you know that saving for the future is a critical aspect of this decision.

However, even at a small business, you may very well not be aware of some of your employees’ personal hardships. They may be struggling under a mountain of debt from medical bills or college tuition. They may need every dollar to help care for elderly relatives or disabled children. They or a family member may be fighting a drug or gambling addiction. All these scenarios can result in an employee deciding to forego saving for their future.

But even if you think it’s not your place to get involved in your workers’ financial decisions, there’s another important reason for upping employee participation in your 401(k) plan — the more participants you have, the more you and other highly compensated employees can contribute to your own nest egg, due to federal regulations regarding the ratio of contributions from each group.

Why Aren’t Employees Contributing?

Reasons workers who aren’t contributing to a 401(k) give for not doing so besides wrestling with debt include giving priority to building an emergency fund (which is more accessible than funds in a retirement account), not having enough income to sufficiently cover daily expenses and preferring to delay 401(k) contributions in favor of funneling income toward purchases such as cars, vacations, electronics, etc.

And although employees often don’t mention it, another big reason they don’t contribute to an available 401(k) plan is that they don’t understand the benefits, which brings us to our first strategy for boosting 401(k) participation: education.

1.       Educate Employees on the Benefits of Contributing to a 401(k)

Many companies provide little in the way of education around investments and 401(k) plans, and some provide none. If you are a small-business owner or a financial advisor working for a small-business owner, you may be in the latter category. We get it — your priority is running and growing your business, not holding your employees’ hands. But if you’re reading this, you have likely already decided that sponsoring a 401(k) plan makes good business sense, so you might as well take the next step and commit to putting some effort into boosting participation in the plan you took the time to choose.

You could email, snail mail or hand out some generic investment advice to your employees, and this may be helpful for boosting participation, but if it’s not, we have some insight into why.

a.       People tend not to read unsolicited mail, even (or especially) from their employer.

b.       The text may be too complicated or technical for some of your employees to understand.

c.       They may want to read it and intend to read it, but never actually read it.

Studies show the best way to get more employees to participate in your 401(k) plan is to hold individual meetings with them. Yes, that takes time, and time is money, but if you do your research and get a handle on why this problem may exist at your company in your area of the country, you can craft a presentation that hits on the major pain points and use it over and over for each employee, leaving a couple minutes at the end of each meeting for questions.

Even if you aren’t that concerned with your personal contribution level and that of your highly compensated employees, you will still benefit as an employer who is invested in their workforce’s 401(k). With an optimal vesting schedule, employees will be more loyal to your company, and they will spend less work time worrying about their financial situation.

If for some reason individual meetings are truly not possible, consider making a video (or having your financial advisor do it) that hits on the major points you want to make, and show it at a mandatory meeting. While some employees may zone out, this method is still better than sending them mail they may never open.

2.       Make Participation Automatic

Today, many companies are choosing to make participation in the company 401(k) automatic. Whenever a new employee is onboarded, they are automatically enrolled in the 401(k) plan. Since participation in a 401(k) plan cannot be made mandatory, employees are allowed to opt out. But most won’t. That’s because one major reason employees don’t join their company-sponsored 401(k) plan is because they never get around to it. Procrastination is real, and it costs people money. 

Imagine if, instead of taxes being taken weekly out of workers’ paychecks, that they were instead tasked with setting aside the money and paying it themselves each year. Mandatory enrollment results in higher enrollment.

Plus, a tax credit is available to companies that start a plan with an auto-enrollment feature. This makes it a win for employees and employers.

3.       Offer an Employer Match

A matching employer contribution can make a big difference in the level of employee participation in your 401(k) plan. When an employer matches employee contributions, the employee feels more as though the employer is invested in their financial well-being. The employee feels more valued and the employer-employee relationship is strengthened.

Additionally, since so many employers offer matching contributions, if you don’t, your employees may be saving their money to invest at their next job — where the employer matches employee contributions.

Start Planning Your Strategy Today

Whether you are a small-business owner or a financial advisor, encouraging workers to invest in their retirement is good not just for them and you, but for the country as a whole. Financially secure people are happier, more productive and sometimes even healthier. They’re in a better position to help those who are struggling, so everyone wins.

If you’re thinking of launching a 401(k) program at your small business, 401GO is the provider to work with. You can get your plan up and running in as little as 15 minutes, at minimal cost to you. If you already sponsor a 401(k) plan, try implementing our strategies to boost participation, and see how your efforts can improve life for everyone at your company.

The post Strategies for Boosting Employee Participation in 401(k) Plans appeared first on Fast and Affordable 401k for growing businesses.

Let’s take a look at how it works and what options you have as a small-business owner who wants to help their employees save more for a secure retirement and strengthen your business’s standing at the same time.

401(k) Plan Sponsor Options

Even if you aren’t a savvy financier, you are likely aware of the difference between traditional and Roth 401(k) plans. With a traditional 401(k) plan, employees (and business owners) make pre-tax contributions to their retirement accounts, putting off paying taxes on these earnings until they begin drawing on them after retirement. With a Roth 401(k), contributions are made after payroll taxes are taken out, meaning no taxes will be paid on these funds upon withdrawal. This second option is often more appealing to the youngest workers, who are likely to be in a higher tax bracket upon retirement, and thus stand to lose more to Uncle Sam. Regardless, there are pros and cons to each option for employees of every age.

Whether you handle your own payroll or you outsource this task to another company, it’s easy to get up and running with 401GO, and once you do, your job is done! 401GO provides seamless payroll integration, so once you finish setting up your 401(k) plan, you never have to think about it again. Our technology syncs with ADP, Rippling and all the leading payroll providers. Additionally, we offer True360 Integration for small-business owners who use smaller payroll platforms, and we provide the same great service for them.

Employers Can Save on Their Personal Taxes

Once you enroll with a 401(k) plan provider, you will be able to make contributions to your own personal 401(k) account as well. Even if you have an IRA, a 401(k) offers benefits you can’t get with an individual retirement account, not the least of which is the ability to contribute much more each year. Additionally, if you’re over 50, you can make catchup contributions so you can feather your nest a little more thickly as you glide toward retirement.

As the business owner, you have the ability to make the call about whether you offer a traditional 401(k), a Roth 401(k) or both (or a SEP or SIMPLE IRA), and you can choose the one(s) that suits your personal situation best. Prefer to make pre-tax contributions? Choose traditional. Want to pay your taxes now? Then a Roth is for you.

With a traditional 401(k), employers usually have to be careful about how much they are contributing to their personal 401(k) accounts in relation to how much their employees are contributing. The IRS has rules (surprise!) about the ratios in order to prevent employers and highly compensated employees from contributing large amounts to their personal accounts if no company matches are being made to other workers’ accounts. Some employers can get around this issue by sponsoring a Safe Harbor 401(k) instead. With this type of plan, businesses don’t have to submit to yearly government testing and audits to ensure fairness and equity, but they are required to make matching contributions to employee accounts.

Saving Tax Money on Employer Contributions

Not only can you save tax money on your own personal 401(k) account, but your matching contributions to employee accounts are tax-deductible as well. Although there is a limit to the total matching funds you can contribute and deduct on your taxes, some of the excess may be carried over to the next year.

Many small-business owners are thrilled to learn about these benefits, because they just lengthen the list of reasons to offer employees a 401(k) plan. You know that as your company grows and becomes more profitable, one of the best ways to secure and retain top talent is by offering better benefits than the next guy, and that includes a 401(k) plan, whether you make matching contributions or not.

If you’re on the fence about matching because you aren’t sure you can afford it, consider the tax deduction we mentioned above, plus the savings you get if you go with a Safe Harbor plan, meaning you won’t have to pay an auditor to conduct the tests others are required to undergo.

Other options include a SEP (Simplified Employee Pension) and SIMPLE IRAs. With either option, your contributions to your employees’ accounts are tax-deductible as with other types of retirement savings vehicles, but with a SIMPLE IRA, you must contribute equally to employees’ accounts and yours — no one can get a different percentage. With a SEP, employers are not required to contribute to workers’ accounts and employees can’t contribute to their own accounts either, but with a SIMPLE IRA, they can.

These types of retirement savings plan have had some popularity with small-business owners looking to avoid the administrative hassles that accompany opening and managing a 401(k), but 401GO has made many of these concerns moot. You can now become a sponsor for your company’s 401(k) plan in 15 minutes and never do another page of paperwork again (unless you want to make changes).

If you need some time to mull these options over or to consult with your financial advisor, give yourself a deadline for doing so — don’t put off this important move that will make such a difference in your life and the lives of your employees.

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