Think that 401(k) plans are just for large businesses with a budget to match? Think again. For the most part, 401(k) plans are employee-sponsored. An increasing number of U.S. employers seem to prefer 401(k) plans over other retirement plans. This mostly due to how advantageous these plans are to employers, as well as to their employees.
Not only do 401(k) plans provide tax deductions for companies, they also provide a great incentive for employee retention. Having a strong 401(k) plan is key to minimizing the impact of churn on your bottom line! Consider the costs associated with recruiting, interviewing, and training new employees. It’ll likely cost you more money to lose an employee than it will to, say, match their 401(k) contributions.
Why are 401(k) plans so highly sought after by employers and employees alike? Most would point to the tax benefit as the main draw. Contributions that you and your employees make to a 401(k) plan are done on a pre-tax basis. In the short term, that means that you’ll pay fewer taxes on your annual salary. In the long run, that translates to extra security as your investments grow tax-free until you’re ready to retire!
With a small business 401(k), you and your employees can save for retirement while lowering your taxable income. Equally crucial is making sure you have a Fiduciary 401(k) Plan Advisor who tracks and evaluates investment performance on a regular basis.
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The Importance of Having a 401(k) Plan Advisor
401(k) plans are complex. They can be cumbersome to set up and maintain. There are many different moving parts, the rules are hard to understand, and the legal regulations are always changing.
The Employee Retirement Income Security Act, or ERISA, outlines the standards for employee benefit plans in private industry to protect participants and their beneficiaries. For example, ERISA provides Fiduciary responsibilities for those who manage and control plan assets, and gives participants the right to sue for benefits and breaches of Fiduciary duty.
ERISA section 3(21) defines the term “Fiduciary.” Section 3(38) sets forth the requirements for serving as an “Investment Manager” to a qualified retirement plan.
If you’re responsible for managing the investment decisions for your company’s 401(k) plan, then you are a Fiduciary to that plan. As a Fiduciary, you’re responsible for creating and maintaining a documented, prudent process to select, monitor, and update investments for the plan. If you fail to do this, you’ll be personally liable for losses due to a breach of Fiduciary responsibilities.
Under ERISA, you can delegate certain duties related to the selection, monitoring, and updating of plan investments to a 3(38) Investment Manager who acts as your Investment Fiduciary. The majority of investment responsibilities are assumed by your 3(38) Investment Manager.
You can also work with a 3(21) Investment Advisor who acts as your co-Fiduciary. Your 3(21) Investment Advisor can recommend the investment lineup for your plan but doesn’t have discretion over plan investments. A 3(21) is for plan sponsors who are willing to accept Fiduciary liability.
You know your business inside and out, but you likely don’t have the time or energy to become an expert on the technicalities of passing nondiscrimination tests, managing Fiduciary risk, or architecting a great 401(k). If you don’t want to risk personal Fiduciary liability for your company’s 401(k), you’ll benefit from direct access to a Fiduciary Advisor. Our 401(k) Advisors know the ins and outs of the plan, keep pace with changing 401(k) rules and deadlines, and provide plan governance.
Passing Nondiscrimination Tests
401(k) plans must pass annual nondiscrimination tests to ensure that company plans don’t favor key employees and owners. They ensure that the plan allows all employees a fair opportunity to save for retirement by assessing employee participation and what percentage of assets in the plan belong to the highest-earning employees.
There are two major nondiscrimination tests to keep in mind:
- The Actual Deferral Percentage (ADP) test. The ADP test assesses the average salary deferrals of Highly Compensated Employees (HCEs) to that of Non-Highly Compensated Employees (NHCEs). Each employee’s deferral percentage is the percentage of compensation that has been deferred to the 401(k) plan.
- The Actual Contribution Percentage (ACP) test. Similarly to the ADP test, the ACP test examines average employer contributions received by HCEs and NHCEs, rather than how much they defer.
In addition to the ADP and ACP tests, 401(k) plans must also pass a third annual compliance test: the Top-Heavy Test. The Top-Heavy Test differs from ACP and ADP because it focuses on key employees, such as highly-compensated officers and owners, within an organization, rather than HCEs.
Ultimately, your company’s plan will be evaluated based upon which employees participate, how much income they defer into their 401(k) accounts, and how much your company contributes to employees’ retirement accounts.
Managing Fiduciary Risk
When companies offer 401(k)s, they take on the serious legal responsibility to make financially sound decisions for their employees. Managing a retirement plan exposes the company and its responsible executives personally to Fiduciary risk. Liability is a real and significant concern—over 83,000 ERISA-related lawsuits have been filed in the past decade alone.
Luckily, you can limit your 401(k) liability by outsourcing your Fiduciary responsibilities. By adding a 401(k) Plan Advisor on your company 401(k) team, you can delegate risk to a professional Fiduciary who will accept that liability.
Architecting a Great 401(k)
You can trust that your Fiduciary Advisor will do everything to keep your investments in good shape. A 401(k) Advisor will:
- Develop an investment strategy that helps employers meet their obligations.
- Introduce programs that can help motivate employees to save for a successful retirement.
- Regularly perform reviews of the investment menu.
- Help you continually boost retirement outcomes.
- Educate your plan participants so they can make informed decisions.
- Keep you up-to-date on regulatory changes.
Every day, Prosperity Financial Group helps small business owners, CEOs, CFOs, Presidents, Executive Directors, and HR personnel reap the rewards of tax-deferred retirement savings with the highest level of investment management, record-keeping, trustee and employee education services—without the complexity, personal liability, and headache.
Our team is dedicated to finding, implementing, and servicing retirement benefit plans for your corporation and your employees. By managing your retirement plans, we free up critical time and resources so you can focus on growing your business.
Read on to get the facts about the types of 401(k) plans.
Employer Benefits of 401(k) Plans
401(k) plans are a huge benefit to your employees—in fact, they’re considered the number one fringe benefit by employees—but 401(k)s are also great tools for employers. As an employer, you enjoy benefits in three major areas: tax, business, and employee satisfaction and retention.
No one wants to pay more taxes than they need to. With a 401(k), businesses can lower their taxable income. The IRS outlines two major tax advantages of an employer-sponsored 401(k) plan:
- Employer contributions are deductible on the employer’s federal income tax return to the extent that the contributions don’t exceed certain limitations described in the Internal Revenue Code.
- Elective deferrals and investment gains are not currently taxed and enjoy tax deferral until distribution.
Moreover, a 401(k) can be more affordable with a small business tax credit. You can receive up to $5,000 annually for your plan start-up costs for the first three plan years.
401(k) benefits go far beyond helping employees reach their retirement savings goals.
- 401(k)s are less expensive than defined-benefit plans.
- The overhead and administrative costs of the 401(k) plan, as well as Employer Matches, are tax-deductible expenses.
- Payroll deduction is an efficient process for managing employee contributions.
- You have fewer employees working past their desired retirement date, which can have an impact on morale and business costs.
- You have access to a broad range of investment options.
- Profit Sharing encourages employees to work harder and smarter to meet and exceed corporate goals.
Employee Satisfaction & Retention
Hiring is a real challenge in today’s job market. The best and brightest job candidates are in high demand, and one way to attract them is by offering a robust retirement plan.
- Competitive retirement benefits to attract new employees and reduce turnover, especially when employers make matching contributions.
- Efficient, disciplined savings are made easy through automatic payroll deductions.
- Pre-tax salary contributions translate to reduced taxable income.
- Some employees enjoy tax credits.
- Investments grow tax-deferred while in the 401(k) plan.
- Option to take up to a 50% loan from retirement savings, depending on the plan.
- Ability to roll over into other retirement arrangements upon job change or retirement.
Types of 401(k) Plans & Features: A Quick Overview
Here are the fast facts of different 401(k) plans and features:
- Traditional 401(k). A traditional 401(k) plan allows employees to make contributions on a pre-tax basis. These contributions, along with any employer contributions and capital gains, are taxed upon withdrawal. A traditional 401(k) gives your employees more options over their timing and the location upon tax remittance.
- Employer Match. Employer Match is when an employer matches their employees’ 401(k) contributions. It’s one of the most common 401(k) plan features.
- Automatic Enrollment. Another key to a successful 401(k) plan is making it easy for employees to enroll (and stay enrolled), hence Auto Enrollment. Since most employees will choose to maintain the same benefits every year, try to focus on making the process as simple as possible.
- Safe Harbor. By ensuring that all employees—regardless of title, length of employment, or compensation—are offered a minimum contribution to their 401(k) plans, a Safe Harbor 401(k) ensures that all companies will pass their IRS non-discrimination test.
- Profit Sharing. Profit Sharing plans allow you, the employer, to make any amount of contributions to employees’ accounts based on the company’s profitability. The contributions are tax-deductible for employers for the previous tax year. This delayed approach lets the employer assess their finances before deciding whether or how much to contribute to each eligible employee’s 401(k) account.
- New Comparability. New Comparability plans allow the bulk of profit-sharing contributions to go towards the owners and highest earners in a company. A company can pass their non-discrimination test by overlaying cross-testing on top of a traditional 401(k).
- Cash Balance. If your business is producing steady revenue, a Cash Balance 401(k) can be a good retirement savings vehicle for you. You’ll enjoy benefits that other retirement strategies can’t offer, including significant tax reductions and accelerated savings.
- Roth 401(k). A Roth option allows you and your employees to make contributions with after-tax dollars. Qualifying withdrawals and investment earnings aren’t subject to income taxes. Adding this option is a cost-effective way to make your 401(k) plan more attractive to two categories of employees: Highly Compensated Employees who are priced out of contributing to a Roth IRA and younger employees who have many decades until retirement.
According to the Society for Human Resource Management, 93% of employers offer Traditional 401(k) plans.
Many employees are concerned about their financial futures, and provide services to help employees with financial decision-making. As pension plans continue to decline in popularity, employers are turning to 401(k) plans to motivate both young and established employees.
A 401(k) is a flexible, cost-effective way to attract and retain employees. It provides an easy way to plan for retirement by directing tax-deferred contributions into an investment fund.
Since a 401(k) is a defined-contribution retirement plan, it’s eligible for special tax benefits. Employees aren’t the only ones who reap tax benefits from a 401(k)—employers can also deduct contributions made to employees’ 401(k) accounts.
One of the most common 401(k) plan features, Employer Match means that the employer contributes a certain amount to employees’ retirement savings plans, based on the extent of employee participation. In 2019, 74% of employers reported matching employee contributions at some level, and the average employer 401(k) match was 4.7%.
There are several benefits to having an Employer Matching Program:
- Tax benefits. 401(k) match dollars are seen as compensation. Therefore, you, as the employer, can reduce your taxable income. The money grows tax-free in your employees’ 401(k) accounts until withdrawn.
- Secure top talent. A robust benefits package helps to attract high-quality employees, especially when you offer higher matching contributions.
- Flexibility. You get to decide the amount that you want to match and what the vesting schedule should look like on your own terms.
- Increased employee participation. You can encourage employees to save more by matching their contributions in their company-sponsored retirement plan.
- Keep employees on track for retirement. When you offer an Employer Match, employee retirement savings can grow more quickly.
- Pass your annual 401(k) compliance testing. It’s easier to pass annual non-discrimination testing because an Employer Match typically increases employee participation rates.
Additionally, there are some business aspects to consider:
- Nondiscrimination tests. Employer Matches must pass the ADP and ACP nondiscrimination tests, which are designed to ensure that your 401(k) plan doesn’t unfairly favor key employees and owners and allows all employees a fair opportunity to save for retirement.
- Vesting schedule. Your Employer Match contributions are protected; they’ll grow in a 401(k) account but can’t be withdrawn or rolled over until they’re 100% vested. In a cliff vesting schedule, this can take up to 3 years. In a graded vesting schedule, this can take up to 6 years.
- Other requirements. For example, you may require that employees work a certain number of hours in a year. You may also require that employees work on the last day of the year in order to qualify for employer matching contributions.
- HCEs. Employer contributions may be limited to HCEs. In 2020, an HCE is any employee who earns more than $130,000. One way to support your HCEs is by adding a Roth to your 401(k).
Automatic Enrollment is a 401(k) plan feature that can help improve employee participation rates by automatically enrolling your eligible employees unless they choose to opt out of the plan.
There are three available Automatic Enrollment options:
- Basic Automatic Contribution Arrangement (ACA). Upon gaining eligibility to participate in your company’s 401(k) plan, your employees will be auto-enrolled at pre-set contribution rates. They’re able to opt out or change their contribution rates.
- Eligible Automatic Contribution Arrangement (EACA). EACA is like ACA, but with one key difference: employees can request a refund of their deferral within the first 90 days.
- Qualified Automatic Contribution Arrangement (QACA). QACA has basic auto enrollment features, and requires both an annual employer contribution and yearly increases in the employee contribution rate. A QACA 401(k) plan is exempt from most annual compliance testing.
There are several benefits to having an Automatic Enrollment Program:
- Higher 401(k) participation. By automatically enrolling employees in your 401(k) plan, you can significantly increase employee participation.
- Better compliance test results. With more employees participating in your 401(k) plan, compliance testing is easier to pass.
- Increased contributions for highly-compensated employees. By passing compliance testing, key employees will be able to maximize their contributions.
- Improve retirement readiness. Help all employees plan for a successful retirement, especially those who aren’t currently contributing to their retirement savings plan.
A Safe Harbor Plan is a type of 401(k) with an Employer Match which allows you to avoid the yearly ADP and ACP tests. If a 401(k) plan includes a Safe Harbor provision, employers can make annual contributions on behalf of employees. Those contributions are vested immediately.
While doing your research about Safe Harbor Plans, you may have come across the term “Safe Harbor Match.” That’s because two of the three types of Safe Harbors involve Employer Matches.
Safe Harbor Match
A Safe Harbor Match is an employer contribution, which can be set up in three ways:
- Non-Elective Safe Harbor. Employers contribute 3% annually to their salary. This amount is immediately fully vested. The employee gets this amount whether or not they contribute to the plan.
- Basic Safe Harbor Match. Employers match 100% of the first 3% of the employee’s contribution, and 50% of the next 2%. Employees are required to contribute to their 401(k) in order to qualify for the match.
- Enhanced Safe Harbor Match. Employers match 100% of the first 4% of each employee’s contribution. Same as the Basic Safe Harbor Match, employees are required to defer money to their 401(k) in order to get the match.
Safe Harbor provisions are among the most popular to add to a 401(k) plan because of the following benefits:
- Contribution benefits of HCEs. You and your Highly Compensated Employees (HCEs) will likely be able to max out their retirement contributions.
- Exempts your plan from most annual compliance testing. You don’t have to worry about most annual compliance testing for your 401(k) plan.
- Tax benefits. As with any employer contribution, your taxable income will be lowered.
However, there are also important considerations regarding the Safe Harbor provision:
- Failing compliance testing. If your plan fails compliance testing, and you don’t add a Safe Harbor provision, then your top-earning employees may be significantly limited in what they can contribute toward their 401(k) plan. As a matter of fact, they generally won’t be able to contribute beyond 2% more than the average of all non-highly compensated employees.
- Employer contributions are 100% vested. Employees can take their money with them if they leave your company, as opposed to earning them over time.
- Employer contributions are required annually. It’s important that your company has a reliable, steady stream of income.
- Due date. In order to be effective by January 1, Safe Harbor provisions must be established by October 1.
Are you wondering whether Safe Harbor is the right fit for your company? Here are some example scenarios of when Safe Harbor could work well:
- Your business has fewer than 10 employees. Let’s say that your business has 10 employees, including the owners. If two Highly Compensated Employees want to max out their 401(k) but the rest of the employees aren’t contributing, then adding Safe Harbor will allow the two HCEs to contribute the maximum and the plan will pass compliance testing.
- Your business has 50 to 80 employees. If your business has 50 to 80 employees and your HCEs want to max out their 401(k) contributions, while others aren’t contributing at all, then a Safe Harbor provision can help ensure that employees who want to contribute the maximum still can. You can even add a Profit Sharing component and still pass compliance testing.
- Businesses with “top-heavy” 401(k) plans. If your 401(k) plan is “top-heavy,” meaning that the portion of 401(k) assets allocated to owners and other key employees is greater than 60% of the total assets in the plan, then the employer Safe Harbor contribution will allow key employees to maximize 401(k) contributions.
While not technically a 401(k) plan, a Profit Sharing plan is often linked with 401(k) plans. It’s a defined contribution plan in which you, the employer, determines when and how much the company contributes to the plan. Profit Sharing means that when times are good, everyone can benefit.
There are several benefits that would make sense for a business to pair a Profit Sharing plan with a 401(k).
- Tax benefits. As with other defined contribution plans, all the contributions accumulate tax-deferred. It’s important to note that employer contributions are only tax-deductible if the plan is defined as an elective deferral plan (i.e., instead of accepting their profit shares as cash, employees defer the assets into retirement funds). Earnings on the contributions grow tax-deferred for your employees.
- Flexible contribution rates. Unlike a 401(k) plan, a Profit Sharing plan doesn’t allow employees to make contributions. All contributions are made by the employer, and the amount is based on their discretion. You can give $0 up to whatever amount makes sense for your business. It provides retirement funds for your employees, yet gives you the freedom to choose how much to contribute each year.
- Take care of Highly Compensated Employees (HCEs). A Profit Sharing plan enables you to make greater contributions to your HCEs without failing IRS compliance limits for nondiscrimination testing.
- Flexible eligibility and vesting schedules. Companies can choose eligibility requirements based on age and length of service. Typically, companies set up vesting schedules that dictate how long workers must be employed in order to claim profit-sharing contributions when they move to another job or retire. Vesting can incentivize retention, as employees receive more contributions to their 401(k) the longer they stay.
- Easily added to any 401(k) plan. When a Profit Sharing plan is added to a traditional 401(k) plan, employees can also save their own money, giving them more control over their retirement savings strategy.
- Generates goodwill. Profit Sharing is a tax-efficient way to reward and motivate employees while creating a feeling of partnership between employer and employee.
The Four Types of 401(k) Profit Sharing
- Pro-rata. Employees all receive the same contribution rate. The amount is based on a percentage of their salary, and it’s determined by the employer.
- Integrated. The employer contributes different amounts to employees based on their Social Security tax levels.
- Age-weighted. The contribution amount is determined based on the age of the employee. Older employees receive more.
- Flexible. Sometimes referred to as “New Comparability” Profit Sharing. Cross-testing allows you to create multiple benefit groups with their own contribution rates.
A New Comparability plan is one variation of a 401(k) Profit Sharing plan. It allows a business to tip the contribution scale in favor of older, higher-paid owners and key employees.
Participants are divided into separate groups with different contribution formulas, and contribution percentages can be assigned to each individual. As a result, business owners and key employees stand to gain a greater proportion of the plan contribution than allowed by a traditional Profit Sharing plan, or even an age-weighted plan.
To use this separate percentage contribution, the plan must pass certain nondiscrimination requirements. The IRS scrutinizes both contributions and benefits when assessing whether Highly Compensated Employees (HCEs) and Non-Highly Compensated Employees (NHCEs) are benefitting equally. Employers are required to provide a gateway minimum contribution to all NHCEs, and to compare the projected retirement benefit not at the current contribution level, but at retirement.
Therefore, employers can use cross-testing and convert annual contributions into equivalent benefits for NHCEs. Because younger employees have a longer time horizon to grow their assets, the plan sponsor is permitted to maximize contributions to older employees. For testing purposes, this can make a 15% contribution to a 55-year-old (10 years away from retirement) as valuable as a 5% contribution to a 30-year-old (35 years away from retirement).
The company has the highest chance of passing the test for New Comparability contributions if the owners are by far the oldest employees in the group.
A Cash Balance plan is a hybrid retirement plan that, in many ways, acts like a defined contribution plan—such as a traditional 401(k)—and a defined benefit plan.
With a 401(k), an employee’s retirement benefit isn’t “defined.” Instead, it depends on the performance of the investments in the account that holds the defined 401(k) contributions. You bear the risk that a market downturn will impact your 401(k), and as an employer, you have no risk in providing a fixed retirement benefit.
On the other hand, with a Cash Balance plan, the amount of money that an employee can expect in retirement is “defined.” Each year, employers make a contribution to the company’s Cash Balance plan based on a specific contribution formula.
A Cash Balance plan has major benefits for the right employers, including:
- Contribution potential above and beyond maximum 401(k) limits. A Cash Balance plan can help business owners accelerate their retirement savings and realize significant annual tax deductions. This is primarily because the annual contribution limits are higher than a 401(k) plan alone.
The annual maximum contribution for a 401(k) Profit Sharing plan is limited to $57,000 ($63,500 for age 50 and older) for 2020, while the maximum contribution for a Cash Balance Plan can be as high as $336,000.
In another example, a 40-year-old California resident in the 35% federal tax bracket that can maximize the contribution would save over $37,000 in taxes and have their earnings compound without the friction of taxes.
- Tax-smart. Cash Balance contributions reduce the owner’s taxable income dollar-for-dollar. Contributions also grow tax-deferred.
- Easily added to any 401(k) plan. Cash Balance plans are generally paired with a 401(k) Profit Sharing plan in order to maximize benefits to the owner and pass compliance testing, which gives employers some funding flexibility.
However, there are also risks to consider:
- Generally set in stone. A Cash Balance plan should only be established if the employer intends for it to be “permanent.” Though the process is lengthy and costly, you could possibly reduce the amount of future contributions to the Cash Balance plan, and can terminate the plan under some circumstances.
- Value fluctuation. The employer assumes investment risk by guaranteeing that the assets within the plan will grow by the stated interest crediting rate (ICR)—regardless of actual market performance.
- Inflexible funding. Contribution credits are required annually and cannot be modified from year to year. Be sure that you can commit to the ongoing annual funding requirements before adopting a Cash Balance plan.
- Higher administrative expenses. A Cash Balance Plan is generally more complex than a 401(k) Profit Sharing Plan. It also requires ongoing actuarial work and higher administrative complexity, and thus, has higher associated costs.
The Cash Balance plan’s main advantages are that they provide one of the highest contributions and tax deductions available, and they heavily favor owners or key employees. But like all investments and retirement plans, a Cash Balance plan isn’t the ideal fit for just any business. It’ll work in your favor if the following conditions are met:
- Your business consistently produces steady income.
- Your company has fewer than 15 employees per owner.
- You and your business partners are more advanced in age than your employees.
- You or your business partners want to significantly increase the rate of your retirement savings.
- You and your business partners have a personal annual income that exceeds $275,000 and are seeking an annual tax deduction of $55,000 or more.
When the conditions are right and when you’re working with a good Fiduciary 401(k) Plan Advisor who can invest the money on your behalf, Cash Balance plans can be much more fruitful compared to other retirement accounts.
As the name implies, Roth 401(k) plans combine some highly desirable features of Roth IRAs with those of traditional 401(k) plans.
By adding a Roth option to your 401(k) plan, you and your employees will be able to contribute post-tax earnings toward retirement. Though salary contributions are taxed on the front end, qualifying withdrawals and capital appreciations are tax-free.
A Roth 401(k) is advantageous for:
- High-earning employees. With a Roth 401(k), business owners and other Highly Compensated Employees have access to a new tax diversification strategy. Unlike the Roth IRA, the Roth 401(k) has no income cap (also known as a “phase out”). A Roth 401(k) also permits higher maximum contribution limits than Roth IRAs—$19,500 versus $6,000 for workers under age 50 in 2020.
- Younger employees. Younger employees will likely be in a higher tax bracket upon retirement and would prefer to contribute post-tax earnings toward retirement.
- Older employees. If your plan permits, older employees can use their Roth 401(k) funds toward purchasing a house, tax- and penalty-free. It’s not a loan, so there is no need for repayment. Also, retirement withdrawals from Roth accounts aren’t included in an individual’s Adjusted Gross Income algorithm and won’t affect their eligibility for certain government subsidies.
Because you’re simply adding a feature to your existing company 401(k), it costs very little to add a Roth 401(k). In fact, it may be free depending on your contracts with your other service providers.
There are some special requirements for a Roth 401(k), mostly surrounding the method of taxation. Give us a call to coordinate with the parties necessary to add a Roth option to your company 401(k).
The 401(k) Advisor Advantage
If you’ve been tasked as a 401(k) plan sponsor, hiring the right advisor is one of the most critical decisions you’ll ever make.
Most people think that the main purpose for hiring a 401(k) Plan Advisor is to pick funds or chase the highest rate of returns. Contrary to popular view, it is the knowledge of how to prudently select investments, as well as the Fiduciary duty to act in your best financial interest, that make a good 401(k) Advisor indispensable to you and your company.
That means your 401(k) Advisor will help you:
- Understand your Fiduciary responsibilities.
- Offload or limit your monumental liability as a 3(21) or 3(38) Fiduciary.
- Teach your plan participants to understand their options, benefits, and how to make changes.
- Ensure your plan stays up-to-date and compliant with government regulations.
- Design and structure a sound plan and adhere to it, as mandated by law.
- Oversee quarterly investment committee meetings to assess the plan’s fund lineup.
- Minimize your risk of huge losses from compliance violations—including individual out-of-pocket penalties arising from lawsuits, accusations of mishandling, ERISA and Department of Labor audits and investigations, and/or penalties.
- Deliver much-needed peace of mind to owners, executives, and employees alike.
Now, we understand that being an expert in all things 401(k) is a tall order.
You’re focused on the daily responsibilities pertaining to the scope of your work, and you probably don’t have the time to become an expert on retirement plans.
For instance, ERISA requires prudent selection and monitoring of all 401(k) investments—but you and your staff want to grow your business, not manage investments.
Moreover, you know that employee participation is a key measure of a plan’s success—but you don’t feel qualified to educate your plan participants about the plan itself, along with all the investment options.
So, here’s the bottom line: given the complexity of running a 401(k), it’s crucial to know what duties and liabilities you want to take on yourself. If you’re looking for customized investment advice and a way to limit your Fiduciary risk, it’s a smart decision to bring a Fiduciary 401(k) Investment Advisor onboard.
We Can Help
Selecting and managing the appropriate investments offered through your company’s 401(k) plan is a serious fiduciary task, as it can impact your employees’ retirement experience.
As your 401(k) Fiduciary Advisor, we’ll research your goals, recommend appropriate investments, and track and evaluate investment performance on a regular basis. We’ll also protect you from exposure to potentially catastrophic Fiduciary liability.
Our goal is to make this complex area of retirement planning as simple as possible through investment management, sponsor advisory services, and plan participant education services.
By having us on your team, you can expect to:
- Significantly lower your Fiduciary risk. There’s a fine line between educating your employees and giving them financial advice. Crossing that line can cause compliance issues and potential liabilities.
- Access our expertise. You’ll have a dedicated Point of Contact who can answer any complicated questions or guide you when you’re feeling lost in 401(k) plan options and piles of paperwork that you don’t understand. With expert counsel, you can maintain ERISA, DoL, and IRS compliance. You’ll receive the advice that you need, right when you need it most.
- Save time. Managing a 401(k) plan takes time, but you’re busy running a business. We’re here to make sure that your employees’ questions are answered, paperwork is completed on time, and you’re up to date on all decisions that need to be made.
- Help your company attract top talent. With a smart plan design and accurate plan management, you’ll be able to attract and retain high-performing employees.
- Plan for a successful retirement. By understanding how to take advantage of more retirement tax strategies, and therefore how to maximize your personal savings, you and your plan participants can feel more confident that you’ll have a successful retirement.
While offering and administering a 401(k) plan may seem daunting, you don’t have to go it alone. We’ll make it easy for your company to offer competitive retirement benefits—without the heavy lifting.
If you’re ready to speak to one of our Fiduciary Retirement Advisors, please fill out the form below and we’ll get back to you shortly. We look forward to hearing from you.
DISCLAIMER: Advisory Services offered through Prosperity Financial Group, Inc., an Independent Registered Investment Advisor. Securities offered through Fortune Financial Services, Inc. Member FINRA/SIPC. Prosperity Financial Group, Inc. and Fortune Financial Services, Inc. are separate entities.