Offering a 401(k) plan is an important part of your employee benefits package. However, selecting the right 401(k) plan administrator is crucial to ensure the plan is properly structured and managed. There are 5 key factors to consider when choosing a 401(k) plan administrator.
Employer Contribution Structure
The plan administrator must have the capability to properly structure and implement the employer contribution structure you want to offer.
This includes:
Matching Contributions: The ability to offer a Matching Contribution structure where the employer matches a percentage of the employee's contribution.
Profit-Sharing Contributions: The ability to offer a Profit-Sharing Contribution structure where the employer contributes a percentage of the employee's contribution based on the success of the company.
The flexibility to offer a combination of matching contributions and/or profit sharing contributions is an important option for every 401k plan.
Integration with Payroll System
The plan administrator must have the capability to integrate the corporate 401k Plan with your existing payroll system. This integration is crucial to ensure that employee and employer contribution structures are adequately aligned.
Investment Flexibility
The plan administrator must have the capability to offer a wide range of investment options. Expert one on one advice based on the individual’s life goals and needs, and a thorough and honest risk assessment rooted in the uncertainties of the investment world.
Employee Education
The plan administrator must have the capability to offer employee education. This includes:
The ability to offer employee education on the 401(k) plan. Personalized, one-on-one employee education can drastically impact the retirement comfort of employees.
The ability to offer employee education on the investment options is essential.
Allocation options for employees can make or break their retirement objectives. Comparable indexes with lower fees will compound and leverage growth over time, resulting in significant real dollar differences over the long term.
The ability to discuss investment strategies based on each employee’s risk tolerances – Competent advisors will be able to adequately answer questions from employees based on their real concerns and investment goals. The wrong advice could lead plan participants astray – with significant real-world impact.
Employer Contribution Structure
The plan administrator must have the capability to offer a wide range of employer contribution structures. This includes:
The ability to offer a wide range of employer contribution styles, structures, and contributions levels – all designed to achieve the employers recruiting and retention goals, while also seeking the best results for plan participants.
By considering these 5 key factors, you can ensure your 401(k) plan is properly structured and managed. This will help to (you) ensure your employees are able to save for retirement in the most effective way possible.
*Submit your question via our inquiry form. We will answer every question in a timely manner.
Comments