PrintA 401(k) retirement savings plan can be a great benefit for both employees and business owners -- employees choose their own contribution amounts and then get to watch their tax-deferred nest eggs grow. Meanwhile, business owners enjoy increased employee satisfaction and retention as well as tax benefits for what they contribute to their employees' plans (not to mention the opportunity to build up their own retirement savings).
The drawback to the 401(k) for the employer, though, is that even a simple plan for a small business is complicated to administer. Between selecting investment options, providing appropriate reporting, maintaining documentation, and adhering to regulatory requirements, it's no wonder that most businesses turn to outside help. If you're shopping for a 401(k) provider, your business bank can partner with you to provide a simple, efficient, and cost-effective solution to retirement plan administration.
Opting for an online 401(k) plan with your bank is likely both easier and less expensive than going with a third-party provider. First, the setup is extremely fast. Traditional offline plans can take up to three months to get up and running due to paper processing delays, while an online solution with your bank can provide an immediate turnaround. The online access is secure and convenient for both you and your employees -- you can update your employee status and contribution amounts easily, whenever you want, and employees can see their account information updated in real-time on the Web. Linking the 401(k) account to your online payroll account makes setup, financial transfers, and employee updates quick and efficient. Additionally, your bank can provide the personal service that makes the process stress-free. Bank staff are ready for the questions a small business owner might have and can give you step-by-step assistance.
Finally, you may be surprised at the cost savings your bank can offer compared to a third-party service. Clearly, you avoid any broker fees you'd incur by hiring someone to help you sort through your options. Because banks offer 401(k) administration as part of an overall service package to attract business customers, their rates are often quite competitive as opposed to providers that only offer 401(k) administration.
Although cost is certainly an important consideration, you want to be sure that your retirement savings plan can deliver long-term returns for you and your employees. You can feel confident about the investment choices open to your employees knowing that the selection has been carefully screened by your bank. Low fees that are transparent and understandable and online tutorials and educational materials will encourage plan participation and help your employees grow their savings wisely.
Get Your 401(k) Plan Set Up in 30 Minutes
Getting your online 401(k) plan established can take as little as half an hour if you're prepared with certain information and ready to make a few decisions. First, you'll want to think about what sort of investments you'd like to offer your employees -- funds that offer higher returns over many years (but may involve some risk and volatility) will be attractive to certain employees, while others may prefer lower-risk investments as retirement nears. You also need to think about what sort of features you want your plan to have. For example, will you contribute matching funds to your employees' accounts? When do you want new hires to be able to participate? Finally, you need your company's tax ID number and the following employee information available to complete the process:
- Full names
- Social Security numbers
- Estimated annual pay
- Hire dates
- Birth dates
The administrative work associated with starting and running a retirement savings plan can seem overwhelming, but your banker can easily guide you through setup and maintenance and educate your employees about their contributions, tax benefits, investment options, and long-term growth potential.
