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.

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.

The post How a 401(k) Helps with Payroll Taxes appeared first on Fast and Affordable 401k for growing businesses.

Why Partner with 401GO?

As an accountant, you like having small businesses as clients, and you want to do your best by them. Outside of filing their tax returns, you may handle a variety of other tasks for them as well, including creating profit-and-loss statements and balance sheets, conducting audits and preparing and filing reports. But one other important task you can undertake to serve your small-business clients is to hook them up with 401GO. 401GO is one of the leading technological solutions helping small-business owners who want to offer their employees a 401(k) retirement plan.

As it stands, millions of Americans — many who work for small businesses — are unable to take advantage of a 401(k) plan because one simply isn’t offered at their place of employment. And while some small-business owners legitimately can’t afford to offer this benefit, for the vast majority, the stumbling block is the investment of time and money it takes to get the company 401(k) plan up and running. 

That’s the pain point that 401GO has solved with our proprietary fintech solution. We make 401(k) setup for small businesses easy, and owners can do it infinitely faster and cheaper than they could with a big bank or other 401(k) provider. Plus, we never charge a setup fee.

As a 401(k) provider, we work directly with small-business owners to get them started with a 401(k) retirement plan, and we also work with financial advisors who help them to manage the plans. As helpful as financial advisors are with respect to small-business 401(k) plans, the truth is that some companies are too new or too small to have a financial advisor they can turn to for advice and assistance. These owners may rely on their accountant or bookkeeper to provide the advice they need for finding a 401(k) company to partner with. Below, we go over some distinct advantages our fintech solutions can provide small-business owners looking for a 401(k) provider.

An Alternative to Auto IRAs

The so-called “auto IRAs” — government mandates that require qualifying employers to enroll their employees in a city or state-administered retirement program or provide one themselves — are a game-changer for small-business owners operating in those municipalities. Many small-business owners are facing deadlines to comply with these mandates, and may be worried and even scared about their role and how to fulfill it.

As an accountant, you can explain to your clients that 401GO’s fintech solutions offer a superior alternative to state-run IRA plans. With 401GO, small-business owners have more options and choices of available 401(k) retirement plans for them and their employees. Additionally, our 401(k) company uses our proprietary technology to get your clients’ retirement plan set up in minutes, versus weeks with a traditional 401(k) provider. Learning this will be a huge relief to small-business owners who were dreading the approaching deadline, fearing they would never have time to get their retirement plan off the ground.

Help with Tax Burden

Small-business owners (and even big-business owners) count on their accountants to know the best ways to legally reduce their tax burden. Sometimes spending money helps a company save money, and starting a small-business 401(k) plan can be one way to do that.

A small-business 401(k) can be a vehicle for profit sharing, which is 100% tax deductible for the business, including contributions to employee accounts as well as the costs of starting up, operating and maintaining the small-business 401(k) plan. It can be a cheaper and smarter way to undertake profit sharing, and it means the employees pay less in taxes as well. The beauty of profit sharing is that owners can change the amount from year to year based on how well the company has done — they aren’t locked into a specific contribution.

Additional tax benefits can be realized through the establishment of a 401(k) retirement plan, including for the rank-and-file employees, highly compensated employees, the employers and the business itself.

The Bottom Line

Depending on who you ask and what type of job it is, hiring and training a new employee can cost anywhere from $1,000 to $20,000, so it is in an employer’s best interest to put effort into retaining top talent. One way to do that is to offer coveted benefits like a good 401(k) retirement plan. And the best 401(k) company for small businesses is 401GO. When your clients are looking for the best and easiest way to start a 401(k) for small businesses, tell them to contact 401GO. Our fintech solutions put us at the front of the pack.

The post How Fintech Solutions Help Accountants Help Their Clients appeared first on Fast and Affordable 401k for growing businesses.

Let’s explore some key strategies for maximizing tax efficiency in retirement planning.

Know Your Client’s Tax Bracket

The first step to maximizing tax efficiency is to understand your client’s current tax bracket and how it is likely to change in retirement. This will help you develop a tax-efficient withdrawal strategy that takes advantage of the lower tax brackets and minimizes the impact of required minimum distributions (RMDs) and Social Security benefits.

Utilize Tax-Deferred Retirement Accounts

Tax-deferred retirement accounts such as traditional IRAs and 401(k)s are a powerful tool for maximizing tax efficiency. Contributions to these accounts can be made pre-tax, which reduces your client’s taxable income for the year. Additionally, investment earnings within the account grow tax-free until withdrawals are made in retirement, at which point they are taxed at your client’s ordinary income tax rate.

Consider Roth IRA Conversions

For clients who expect to be in a higher tax bracket in retirement, a Roth IRA conversion may be a smart strategy. This involves converting funds from a traditional IRA or 401(k) into a Roth IRA, which is funded with after-tax dollars. While this will result in an immediate tax liability, withdrawals from a Roth IRA in retirement are tax-free, which can result in significant tax savings over the long term. Most advisors prefer to apply this strategy toward year end. 

Plan for RMDs

Once your client reaches the age of RMD, they will be required to take distributions from their tax-deferred retirement accounts. These withdrawals are taxed as ordinary income, and the amount of the RMD increases each year. 

To minimize the impact of RMDs on your client’s tax liability, it may be beneficial to start making withdrawals before age 72 or to strategically time withdrawals to take advantage of lower tax brackets.

Use Tax-Efficient Investments

Finally, it is important to select tax-efficient investments for your client’s portfolio. This can include municipal bonds, which are exempt from federal taxes, and index funds, which have lower turnover and therefore generate fewer capital gains. By selecting tax-efficient investments, you can help your clients maximize their after-tax returns and minimize their tax liability.

Maximizing tax efficiency is an important part of retirement planning. By understanding your client’s tax situation, utilizing tax-deferred retirement accounts, considering Roth IRA conversions, planning for RMDs, and using tax-efficient investments, you can help your clients minimize their tax liability and preserve more of their savings for their retirement years.

Disclaimer: This is not financial advice. Seek advice from a tax professional when looking at tax-efficient investment implications for your clients. 

The post Maximizing Tax Efficiency in Retirement Planning for Your Clients appeared first on Fast and Affordable 401k for growing businesses.

But they’re not right for every business, so make sure you understand the pros and cons before jumping into this type of retirement plan.

What are Non-Elective Contributions? 

Non-elective contributions are funds employers pay directly to workers’ retirement plans, regardless of whether employees make their own contributions. These contributions come directly from the employer, and are not deducted from employees’ salaries.

This distinction separates a non-elective contribution from a matching contribution plan where an employer contributes depending on the amount of money deducted from an employee’s salary.

Employees love non-elective contributions because they are paid above their regular wages, essentially giving them extra compensation without extra work. And, when invested, these funds can provide a substantial boost to their retirement savings, helping them achieve more than they could do on their own.

Employers love them too. Non-elective plans give businesses the flexibility to change contribution rates as needed. However, non-elective contributions can not exceed the annual contribution limits the Internal Revenue Service (IRS) set ($58,000 annually in 2022).

And, they provide advantages that can help businesses plan for and moderate their tax burdens. 

Advantages of Non-elective Contributions to Small Businesses

Non-elective contributions are tax deductible and can encourage more employees to participate in the company’s retirement plan.

The decision to offer fully-vested non-elective contributions can also provide retirement plans with Safe Harbor protection, which exempts plans from government-mandated nondiscrimination testing, refunds, and penalties. The IRS administers these tests to ensure plans are designed to benefit all employees instead of favoring highly-compensated ones. Making non-elective contributions can help employers meet this goal while remaining compliant with government rules. 

To be granted safe harbor by the IRS, employers’ non-elective contributions must be at least 3% of employees’ pay. For example, an employer may decide to contribute 10% of the employee’s salary towards the retirement plan. This means that, for every one dollar of salary, the employer will contribute 10 cents, regardless of whether the employee makes an elective deferral towards the plan.

Contributions are made at year’s end, giving employers time to determine what they can afford. However, safe harbor non-elective contributions can also be paid with each payroll, equalizing these annual costs. And, using an automated provider like 401GO, these payroll deductions are done automatically, removing the time and hassle burdens from business owners and their admins.

Plan sponsors can select different eligibility rules for the non-elective and matching contributions. For example, a plan could allow immediate eligibility for employees to make their own deferrals, while requiring 1 year of employment before receiving profit-sharing funds. 

Because non-elective contributions don’t count toward the IRS deferral limit, highly compensated employees can maximize their retirement contributions, and the employer will not have to worry about annual compliance testing. Some of the calculation options are weighted for age and salary. This allows business owners to offer attractive compensation plans to their key employees, and gives them added ability to maximize their own retirement accounts.

401GO can help you design a plan with Safe Harbor non-elective contributions that meet your business needs and ensure compliance.

Disadvantages of Non-elective Contributions 

Offering non-elective contributions may not be feasible for all employers, especially those running small businesses. Making non-elective contributions means flowing money into default funds for employees who don’t manually enroll, contribute, or select an individual retirement plan. Employers must take due diligence and be responsible for enrolling and selecting this fund for the employee.

To simplify this process, the Pension Protection Act of 2006 outlined its Qualified Default Investment Alternatives (QDIAs) program and how employers can enroll workers in these funds while maintaining Safe Harbor protection.

However, this should not be viewed as the definitive option that would meet the needs of all employees. Employers should still look at their workforce to determine the appropriate plan needed for them while also remaining compliant with government regulations.

Choosing 401GO as your 401(k) provider can alleviate some of these concerns, as we will provide for the QDIA, send out required annual notices, file reports, and manage the administration of the plan on your behalf.

Tax Benefits Can Save Businesses Thousands 

One of the main benefits of non-elective contributions is that the contributions are tax-deductible for the business, which can provide a significant tax break for the employer. Businesses can provide additional retirement funds in lieu of a raise, without increasing payroll taxes, and many employees prefer this type of compensation, making it a win-win. 

Employers who make a non-elective contribution can often offset the cost of the contributions from the tax breaks they receive. 

Why Employees Love Profit-Sharing

A benefit of non-elective contributions is that this may be the only funds the employee is putting into their retirement account. A shocking 55% of employees do not keep a retirement savings account, which leaves them more vulnerable to retirement emergencies and expenses. 

Employees with tight budgets often appreciate having some retirement savings without needing to defer any of their own pay. By giving such employees non-elective contributions, an employer motivates the employees to contribute to their 401(k) plan more frequently and plan for their retirement.

Is a Non-Elective Plan Right for You? Just Ask.

Profit-sharing plans are not right for every business. They can be expensive for some small companies, so you’ll want to consider all your financial and labor needs before committing. 

401GO makes the process as seamless as possible. We provide profit-sharing calculations, simple automated management, payroll integration and compliance monitoring all at a low per-participant price.

If you’re thinking of offering non-elective contributions to your team, ask us for a quote. We’ll be happy to walk you through the decision.

The post How Do Non-Elective 401(k) Contributions Work? appeared first on Fast and Affordable 401k for growing businesses.

Yet, one feature has been a frustration for many fintech users, and that is customer support. When questions arise or plans go wrong, automated support is rarely an ideal solution for end users.

The best fintech providers understand this problem, and are laying aside technology where human understanding is needed.

Robots Aren’t Good at This

Automated support can be provided in several ways. Most commonly, companies offer an extensive knowledge center with a good search function so that users can search for—and find—answers to their questions. For common questions, or after-hours inquiries, a knowledge base of articles or videos can be a good starting point. 

Another common strategy is a chat bot or phone tree, with pre-programmed questions and answers. Chat bots can be effective at helping users get to the correct answers or discover the terminology they need to use to find a better answer, and phone loops always answer.

However, if you’ve ever used either of these solutions yourself, you’ll recognize why they are frustrating. Because they aren’t human, they don’t function or think as humans do, so humans tire of them quickly. Bots can’t handle complex or sensitive problems, they don’t understand the nuances of language, and they can’t think strategically if the problem is unusual or the answer is not readily available. 

Plus, humans are just friendlier than robots! 

Not Just Human, But Useful Human Support

Robots are better than humans at many jobs, but for some tasks, there is no satisfactory substitute for human interaction. 

But even live support can be frustrating if support agents don’t have enough knowledge or authority to solve problems, or if the underlying technology is so limited or difficult to navigate that no good solutions exist.

That’s why it’s imperative that excellent support and excellent technology are able to work together.

At 401GO, we offer live support for all participants, as well as a dedicated relationship manager for plan sponsors and partners. Our agents are trained in all aspects of 401(k) management, and they are dedicated to making sure all participants and plan sponsors have a good experience. 

We take customer feedback seriously, and we plan many of the updates to our technology around what our users and partners ask for.

During business hours, clients are able to call our main line or use the chat bot on the website for live help. At any time, they are able to email us, or leave their email address with a question on the chat bot, and receive a reply the following day. 

Experience the Difference

We frequently receive feedback from our clients about how great their experience has been, thanks to our helpful team. 

Read these examples:

“It was easy to set up with all the support provided… The 401GO team has been fantastic to work with every step of the way!” 

President of small business

“They have great real phone support in the US which many of their competitors do not provide. They are not just some AI firm who has a robot do it all.”

Partner of small business

“Every step of the onboarding and execution process has been a breeze. I was a little confused regarding 401k rules and regulations but their support team answered my questions quickly and knowledgeably.” 

President of small business

“The 401Go staff is incredibly responsive and helpful. They seem to genuinely listen to user feedback to improve their platform and services.”

Owner of small business

“I have enjoyed working and learning with Jared and Kelly over the past six months. Their response time is quick and fast. They solve any problem for our clients or me within hours… The benefits that I have realized are the quick response time and answers to any questions.”

Benefits manager of small business

“Their customer service is dynamite.”  

Owner of small business

Best D*** Retirement App

The best retirement platforms pair excellent automation technology with excellent live customer support, and do it without overcharging customers. 

To learn more ways fintech 401(k) providers are changing the game for small businesses, read the full list.

The post The Future of FinTech: An Automated 401(k) with Live Human Support appeared first on Fast and Affordable 401k for growing businesses.

That’s because a 401(k) comes with various benefits, from tax deductions and credits to increased employee retention and satisfaction. But, there are also several things business owners must consider when starting a 401(k) for their business. In this article, we’ll explore how a 401(k) can reduce your taxes as a business owner.

Read on to learn more.

Personal Tax Savings for Owners and Employees

One of the best advantages of a 401(k) is it allows both owners and employees to save for retirement. And fortunately, retirement accounts like 401(k)s come with some unique tax advantages that separate them from a regular investment account. 

Let’s explore the two primary options below.

Traditional (pre-tax) contributions

A traditional 401(k) means all contributions happen before taxes.

This allows both owners and employees to contribute to their 401(k) without paying federal or state income taxes on those contributions. That can create significant tax savings now by lowering their taxable income. Then, traditional 401(k) funds grow tax-free until retirement, and distributions are taxed as ordinary income during retirement.

It’s important to know that there are annual contribution limits for participants and employers, with special catch-up provisions for employees and owners over age 50. Be sure to check the latest guidance from the IRS, as these contribution limits change over time.

Roth (after-tax) contributions 

With a Roth 401(k), all contributions are made after taxes.

This means that instead of creating a tax deduction now, participants pay taxes today in exchange for tax-free growth and tax-free distributions in retirement. This can be very appealing for participants or owners who anticipate being in a higher tax bracket during retirement and want to lock in their favorable tax rate now.

While this does not create a tax deduction like a traditional 401(k), it can be a great way to diversify tax treatment. In addition, just like traditional 401(k)s, Roth 401(k)s have annual contribution limits for the participant and employer, with special catch-up provisions for participants age 50 or over.

Remember to check the annual contribution limits directly on the IRS website.

Profit-sharing contributions

In addition to the typical matching contributions, businesses can choose to offer profit-sharing contributions to their participants. These contributions are tax-deductible for the previous tax year. This means businesses have time to determine how much they can afford to provide. 

Participants tend to prefer this type of benefit, because it doesn’t increase their taxable income, often making it more valuable than a bonus payment. It also doesn’t count toward the IRS deferral limit, making it particularly helpful for highly compensated employees who may have their 401(k) contributions maxed. 

While there are several different profit sharing methods available, business owners can benefit from using the new comparability calculation. It typically provides more compensation for those who are older and make more money, which can give owners the ability to maximize the contributions to their own accounts.

Business Tax Savings

In addition to the tax savings and advantages as a participant in your own 401(k), there are several business tax savings opportunities to consider.

Deductible Expenses

Since a 401(k) is an employee benefit, the costs associated are deductible expenses.

This includes contributions you make to employee accounts and any administrative costs that come with establishing and maintaining your 401(k) plan. For example, many 401(k) plans include fees for third-party administration, recordkeeping, auditing, and hiring outside consultants. 

These deductible expenses are a great way to save money at tax time while offering a high-quality benefit to your employees.

Offsets compensation

Another unique way that 401(k)s can reduce business taxes is by offsetting compensation.

When creating compensation packages, employers must value the benefits and compensation offered. Often, this means when employers provide a 401(k) with matching contributions, they can either reduce or forego an upcoming raise as their employee is receiving additional compensation through the 401(k) plan. 

This offers unique tax savings for employers because of the way matching contributions are taxed.

In essence, employer matching contributions to 401(k) plans are always pre-tax, meaning they aren’t subject to Federal Income Tax, Social Security, Medicare, or other payroll taxes. This means that if employers offset payroll wages for 401(k) contributions, they can save the additional amount they would have paid in payroll taxes while creating a deductible expense.

Tax Credits

Lastly, specific tax credits are available to business owners to help offset the costs of establishing a retirement plan like a 401(k).

It’s important to note that you can either claim the tax credit or deduct the startup expenses, but you cannot do both. For tax years 2020 and beyond, employers may qualify for a credit of at least $500 and up to $5,000 for 50% of their startup costs. Credit amounts depend on your situation, with the following options:

Be sure to work with your accountant or tax professional to verify eligibility and visit the IRS website for additional details.

Potential tax credits through SECURE Act 2.0

In addition to the current tax credits, the SECURE Act 2.0 would expand tax credits for small businesses with a 401(k). The bill is currently undergoing debate in the Senate after passing through the House in a nearly unanimous vote on March 29, 2022. 

Some key highlights of the bill include expanding the current tax credit to cover 100% of start-up costs (up to $5,000) and creating a new tax credit that offers employers a credit for a percentage of plan contributions made for the first four years, up to a proposed per-employee cap of $1,000.

401GO is Here to Help

At 401GO, we provide small business 401(k) plans powered by an easy-to-use platform. Our streamlined approach allows you to get up and running in just minutes with simple and affordable pricing to fit your unique business.

You can learn more on our website or click below to get started today.

The post How a 401(k) Reduces Your Taxes appeared first on Fast and Affordable 401k for growing businesses.

Why Do You Need a Simple 401(k) Setup?

If you research the process of setting up a 401(k) plan, you’ll come across recommended steps like:

• Create a plan document that complies with IRS code
• Set up a trust to hold plan assets and choose a trustee
• Find a recordkeeper to record employee contributions
• Provide legal information to all plan participants
• Select the funds that will be available in your plan

For many business owners and partners, these steps can be daunting and are enough to keep them from setting up a retirement benefit for their employees. This may be a big reason why only a small percentage of small business owners offer a 401(k).

The new generation of retirement plans streamline the process to eliminate most of these steps, saving not just hours or days, but potentially weeks of time and hassle.

What the 401GO Platform Does for You

We’ve tasked our development team with creating the most simple and effortless plan setup possible. Our setup process was created with three big goals in mind:

1. Make it easy: use the fewest questions possible and eliminate any unnecessary steps.
2. Make it fast: most trustees complete the setup process in around 15 minutes.
3. End worrying and hassles: we manage the technical details so plan sponsors don’t have to.

Most 401(k) providers require 4-8 weeks or more to set up a plan, depending on the type you choose. We believe business owners shouldn’t have to wait 8 weeks to implement a retirement plan! You should be up and running today!

How Our Fast 401(k) Plan Setup Process Works

The secrets to our effortless setup are automation and service bundling. These two modern advances, working together, create an environment that allows us to manage all details that are headaches for employers.

Here’s how:

• Automation creates the plan document: Our team knows the IRS code. And, more importantly, so does our technology. With just a few questions, we know enough about your needs to create a plan document that complies with ERISA requirements.
• Automation creates a dashboard: Your dashboard is how you see your plan details, participation rates, total assets, contribution amounts, payroll activity and so forth. This requires no setup on your part, it is automatically created by our technology.
• Automation creates payroll integration: If you use a common payroll provider, we probably have an integration set up already. Our Plus and Premier plans include our True360 integration with every payroll provider possible. 
• Automation handles participant enrollment: Some plans have auto-enrollment, but even if they don’t, our system sends information to the participants to make sure they are enrolled properly. This automation actually increases participation rates and reduces headaches.
• Automation eliminates complexity: You don’t need to spend time researching plan designs and legal requirements or setting up a trust and worrying about choosing a trustee. We’ve spent the time to simplify the setup so you won’t make a wrong plan choice or worry about future problems.
• Automation eliminates manual entry errors: One wrong entry could potentially cause huge headaches. With automation, there is no manual entry, and therefore no manual entry errors to double-check.
• A bundled solution reduces the burden on you: 401GO serves as the recordkeeper and the administrator, and we partner with Matrix Trust for custodial services. Not only is this a great long-term solution, but it helps to streamline the setup. Plan providers don’t need to find a recordkeeper, because we provide that service. They don’t need to train an administrator, because we provide that too. They don’t need to spend weeks consulting with professionals about plan design. All that setup work is already handled before you even begin.
• Service bundling eliminates many communication barriers: You’ll only need to communicate with one service provider, so you won’t experience the problem of various providers pointing fingers at each other when there are problems.
• Automation + bundled solution requires fewer answers from you: Our setup process only has a handful of questions, because we really only need a handful of answers. Fewer questions mean less time spent on setup.

Tech + Touch

Our amazing automation is supported by an even more amazing group of professionals. In the unlikely event something does go wrong, or you need more detailed help, you can make a phone call and talk to a human who will be friendly and helpful. In fact, our stellar customer support might be our most praised feature!

You can see why an effortless setup is one of the most important features we offer! Saving you weeks of waiting, hours of time, and loads of worry is what makes 401GO special. If you’re ready to get started, take a few minutes to set up your company 401(k) plan today. 

The post How Modern 401(k) Providers Eliminate Complexity appeared first on Fast and Affordable 401k for growing businesses.

Back in December of 2008, when small business owners Niasha Hawkins & Lemule Hawkins started trucking company Blackhawk Express, they were in the midst of a journey. This journey had taken them from Arkansas to Louisiana to Texas. When things were so challenging in 2009, little did they know that they would become the proprietors of two trucking companies with 35 employees and 26 tractors running intrastate routes for FedEx. Today, it is easy to hear the joy they feel for the growth of their family and their business.

The Journey to Blackhawk Express

Offering benefits, let alone a 401(k), was a distant dream in 2008. Up to that point, Lemule Hawkins had held various jobs such as grocery stocker and armored truck driver. Niasha Hawkins had attended college and become a mother. They saved up to purchase their first tractor and in 2009 Lemule started to carry for DHL. Things continued to be tight. Niasha supported the business with her work as a medical coder. The light at the end of the tunnel came in 2010 when Lemule started working with a company that would eventually be bought by FedEx. Stability was on its way.

That is why they feel so strongly about their role in the lives of their employees. When asked about their relationship with their employees. Niasha says, “Blackhawk is a small company, so our relationship has more of a family feel. We are growing and learning together with our employees. We give opportunities for moving up in the company from within the company first. Our compensation is very competitive because we value the quality that our employees bring to Blackhawk. Facebook and Instagram even tell the story of several employees who are in a band called The Hawkins Boys.

Blackhawk Express Cares for Employees

Niasha is proud to say that they strive to care for each and every employee as a company. “We have personally given our employees calls and assistance when they are dealing with illness and emergencies and life issues,” she relates. “We make sure we consider how employees can work but still have time for their families by offering local positions that will have our drivers home every night.”

She tells of how their office is only open 6 hours a day, from 9 am to 3 pm. “I did that at the start because I am a mother.” Niasha is now the mother of three: 21, 13, and 6 years old. Niasha relates, “It is set up so employees can bring their kids to the office if they wouldn’t be ok at home by themselves.” The work is routine and involves mostly computers so taking a break to parent for a few minutes here and there is not an issue.

Blackhawk Express Delivers Unexpected Benefits

Blackhawk offers traditional medical coverage as an extension of their care for their employees, but they’ve expanded their benefits beyond the basics. Along with healthcare, they offer counseling services, discount vacation referrals and planning, a suite of safety classes for the drivers, and a 401(k) retirement plan.

The counseling benefit includes 8 visits to a professional. Niasha says, “This has helped some of them talk to someone when they’ve needed it. It has helped.”

A 401(k), from 401GO, is another benefit Niasha and Lemule offer that they think is important. Retirement is not on the minds of the employees. But when Blackhawk offered a 401(k) they only expected about 4 employees to participate. Quickly, thirteen employees decided to participate in the 401(k) out of the pool of about 35 eligible. These are employees that previously hadn’t been doing anything to prepare for retirement. That was beyond their expectations. 

Niasha says they needed to push the benefits at the start, “But it’s for their own good.” After a time, employees enjoy and count on benefits. Niasha believes it is keeping them loyal to Blackhawk. The average tenure for their drivers is over 8 years. This is incredible considering the average tenure of truck drivers is under 2 years according to Fleet News Daily.

“One of the managers that have been with us the longest has finally enrolled in the benefits. He sees how important they are.” Since trucking is a traditionally old-school industry, benefits and especially a 401(k), are not something the employees are expecting from Blackhawk when they get hired. That says a lot about Blackhawk.

The Outlook for Blackhawk Express

Niasha is very positive about the long-term outlook for Blackhawk  “We plan to keep growing, over the coming years maybe sell off some parts, and keep pieces that we enjoy.”  After a rough start as small business owners, the pride in Niashas voice for her business and especially her family is obvious and hard-earned.

401GO simplifies the 401(k) retirement savings process for business owners, HR professionals, and employees. Contact us today to learn more about our technology and customized solutions.

The post Blackhawk Express Delivers Benefits Wherever They are Needed appeared first on Fast and Affordable 401k for growing businesses.

Until just a few years ago, very few small employers offered a 401(k). Traditional plans are complicated, hard to understand, and expensive. Many benefit providers won’t even bother to create a small plan. A retirement option for small businesses just wasn’t practical.

Modern 401(k) providers are creating a new environment of opportunity for small business owners, HR specialists, and financial advisors. These providers leverage cutting-edge technology explicitly designed to improve participation and significantly reduce the overall risk for owners of small businesses.

Most importantly, these innovations offer a user-friendly platform that provides a simple pathway to a comfortable retirement that has not been available to millions of American employees before now. 

Does an online 401(k) plan make sense for your small business?

The key piece of technology that makes this new generations of plans available is automation. Many of the individual tasks related to 401(k) plan creation and administration can be better performed by automation technology. 

Knowing some of the most significant benefits of an online 401(k) plan can help you decide if this new type of retirement savings program is right for your business.

• Automated Onboarding
  Forget about chasing people and paperwork. Automation technology eases the setup process from weeks of hassles to just a few minutes of focus. In just 15 minutes, you can have your new plan completely set up. This includes the plan document, dashboard login, and notifications to employees.
• Increased User Control
  The best digital retirement savings strategy puts employees and plan sponsors in control of their contributions. Once set up in the system, participants can log into their accounts and easily see allocations, modify savings, and ask questions.
• Cost-Savings
  Traditional 401(k) options are expensive. But, thanks to the amount of work that is saved using automation, online retirement solutions are able to offer affordable plans for even the smallest businesses. You’ll enjoy a high-end plan at a rate that traditional 401(k) providers can’t touch.
• Plan Flexibility
  Business owners and financial advisors know firsthand that their employees and clients have unique needs. Using an online 401(k) vendor eliminates the need to force-fit employees into a predetermined category based on their age and risk tolerance. Instead, employers and financial planners have the flexibility of adding the various components. Our unique algorithmic guided selection process is a new approach to investing which accounts for the nuances of participants’ needs for the right final fit.
• Payroll Integration
  You won’t need to pay a bookkeeper, because leading online providers integrate with your company’s payroll or HR system to drive efficiency. Integration not only saves time, but also reduces errors. Once the integration is complete, you won’t need to worry about it again!
• Automated Compliance
  Manually managing compliance can put both businesses and financial advisors at risk. A modern retirement solution automates compliance, monitoring constantly for problems to ensure they can be resolved quickly before they get out of hand.
• Access to Actual Humans (Yes, Really)
  Leading online 401(k) providers won’t just offer the best plan — they’ll also offer the very best people. You’ll have access to their customer service support team to provide clarity and answer questions for optimized peace of mind.

401GO: An Industry Game-Changer

401GO was built to provide small businesses with affordable 401(k) plans that don’t sacrifice quality. A retirement benefit can lend credibility without breaking the bank, increasing your competitive advantage in today’s difficult job market.

To learn more, schedule a quick discovery call with one of our professionals today.

The post 7 Ways Online 401(k) Plans Change the Game For Small Businesses appeared first on Fast and Affordable 401k for growing businesses.