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    Essential Tips for Choosing the Right 401k Plan for Small Business

    A retirement plan such as 401K can boost employee retention and help small businesses compete for talent. However, a business owner must find the right provider to meet their budget and financial goals.

    Look for providers that offer hands-on customer support to set up the plan, manage employee information, and respond to questions and changes. This article will look at the different types of retirement plans a small business can offer to their employees.

    Investment Options

    Investing a company’s money in the stock market is not without risk. Most 401(k) plans for small businesses allow employees to choose from a broad range of investments — mutual funds and exchange-traded funds (ETFs) — guided by professionals. In a well-designed portfolio, investors should only have enough market exposure to generate reasonable returns while keeping their risk level low. Look for providers that offer a diverse lineup of low-cost, no-load mutual funds and ETFs that can accommodate any investment style. They should also have 24/7 customer support for any questions or concerns that may arise. If you search around, several companies offer a cost-effective automated goal-based investing service and 401(k) that integrates seamlessly with your business. Its robo-advisor manages a core portfolio of passive index-tracking equity and bond ETFs, as well as taxable traditional IRAs and SEP IRAs, with the possibility of supporting simple IRAs in the future.


    The cost of a 401k plan can vary by provider. Some offer all-inclusive plans for small businesses that are less expensive than traditional 401(k) providers. Most charge a setup fee, monthly (or annual) administrative and per-participant fees, and an investment or advisory fee. Employees pay exchange-traded fund (ETF), mutual fund expense ratios, and any fund trades.

    Investing in retirement benefits can greatly impact employees’ financial health and morale. It can also help ensure they have enough money to enjoy a comfortable retirement.

    That’s why it’s important to take the time to research a range of potential 401(k) providers and costs before choosing one.


    Offering retirement savings options is an excellent way to attract top talent and make your business more competitive. But the right 401k plan can also help you save tax money and allow your employees to grow their wealth with the company.

    When evaluating 401(k) providers, look for one that offers the features you need in your plan, including automatic enrollment and safe harbor provisions. You should also look for a provider that provides a clear, easy-to-understand summary plan description (which the IRS usually requires) and a user-friendly online dashboard to monitor your account activity and make changes.

    Some providers offer specialized 401(k) services for small businesses. For example, a provider offers a user-friendly 401(k) that includes recordkeeping, administration tools, and payroll integration for an affordable monthly fee.

    Professional employer organizations (PEOs) can be an excellent choice for more specialized options. PEOs are third-party companies that handle small businesses’ HR, payroll, and employee benefits and often offer competitive 401(k) plans with minimal requirements and short-term contracts.


    Offering a retirement plan benefits small businesses by improving employee morale and financial security while reducing turnover costs. However, maintaining the plan can take time and effort for a small business. To help minimize costs and reduce administrative duties, consider using a provider that offers payroll integration, which connects with your existing payroll system to automate administration and compliance monitoring. This is especially important as your business grows, and you must ensure your 401(k) provider can scale with you.

    A 401(k) is more complicated for companies to administer than a SEP or simple IRA and requires more complex reporting and testing. For this reason, a qualified plan is typically best for larger businesses that can manage the additional compliance requirements. Self-employed individuals should consider an Individual 401(k) or a Solo 401(k) to maximize retirement savings. This plan allows business owners to contribute up to 20% of net self-employment income for 2022 and offers tax-free contributions. It also has lower fees than a SEP.


    You’ll want to find a provider that offers all-inclusive pricing. This means they handle the 401(k) plan set up, compliance testing, day-to-day plan administration, and recordkeeping. This helps keep costs down and frees you to focus on other business aspects.

    Ask about flat rate and per-participant fees, which will vary by provider. These expenses include a one-time plan setup fee and monthly or annual administrative and investment fees. You may also pay per-trade or fund management fees when trading funds in your 401(k).

    If you need a retirement plan for your small business, look for providers specializing in these plans and offering dedicated support for small businesses. For example, a company dedicated to small businesses includes a single-time setup fee and ongoing administrative fees based on your size. In addition, we charge a low asset-based fee and offer participants access to expert retirement specialists. This helps you stay on top of your 401(k) and maximize your benefits. For more information, click here to schedule a plan consultation.



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