Choosing the Right 401(k) for Your Employees & Your Business

Implementing a 401(k) plan for your employees is good business. It means you’re thinking strategically, that you care for your employees, and are focused on the long-term health of your company. Implementing a retirement plan:

• Can help you attract and retain top talent.
• May make you eligible for tax credits.¹
• Can allow you to deduct contributions to employee 401(k)s as business expenses.
• Helps ensure that your employees are preparing themselves for their future well-being.

In short, there are many good reasons to implement a 401(k) plan, and hundreds (if not thousands) of providers eager to help you do so. Choosing among those providers can be a bit bewildering, so we’ve put together a preliminary checklist to help you get started. Of course, your business and its needs are as unique as your employees, so customize this list and prioritize it however suits you best.

Starting Checklist for Evaluating 401(k) Providers

1. Assess (and rank) the reputation of the providers you’re considering. Read client reviews and see if the Better Business Bureau has anything to say about them.
2. Ask the providers you’re considering to define their corporate structure and certifications. Are they an investment broker? An insurance agency? Do they employ Registered Investment Advisors who have a legal obligation to put the interests of you and your employees first?
3. Most solutions are powered by larger platforms – recordkeepers, plan administrators, investment managers, financial professionals, etc. Know who they are and the role(s) they will play. Are they well known? Respected? Leaders in their industry?
4. Determine what fiduciary role the provider will assume in the relationship and what protection from fiduciary liability they offer.
5. Ask for references who will share their experience with the provider. Rank providers on ease of implementation and administration.
6. Ask for an apples-to-apples cost to your business based on the size of your employee/participant base.
7. Review the investment options that will be available to your employees and their relative costs.
8. Nail down the specifics of administration responsibilities. The IRS provides its own handy checklist for defining key service agreement elements with plan providers.²
9. Ask for a demonstration of both the interface you’ll use to interact with the provider, and what your employees will use to access their 401(k). Rate them on how intuitive and easy to use they are.
10. Add more items to this checklist based on what you learn from the preceding line items and what emerges as most important for your business and your employees.

You’ve got this!

The road to implementing a 401(k) plan for your employees may get a little rocky at times, so put the work squarely on the providers – they should be eager to earn your business – and keep yourself firmly in the driver’s seat. Given that nearly half of U.S. families currently have no retirement savings,³ what you’re trying to do for your business, your employees, and their families is both important and well worth the effort. Lead on!

Important Disclosures:

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Content in this material is for general information only and not intended to provide specific advice or recommendations.

LPL Tracking #1-05164767

¹ https://www.irs.gov/retirement-plans/retirement-plans-startup-costs-tax-credit

² https://www.irs.gov/pub/irs-pdf/p3998.pdf

³ https://www.epi.org/press/nearly-half-of-u-s-families-have-no-retirement-savings-policymakers-should-expand-social-security-to-meet-21st-century-retirement-needs/

Chris Marshall

Chris Marshall is a Wealth Advisor with Fusion Financial Group, an independent financial planning firm and fiduciary based in Denver, CO. Located in Wisconsin, Chris has 15 years of experience in the financial services industry. At the beginning of his career, he specialized in both portfolio construction and real estate products, fostering a diverse understanding of investment markets. He is compassionate, motivated and hardworking, making him a natural fit as a Wealth Advisor within an independent financial planning firm. Chris focuses on coaching small business owners and new investors. Chris majored in Business Administration at Colorado State University. Since then, he has built a background in investment model design and securities. Chris received the designation of Accredited Investment Fiduciary (AIF^®), a symbol of his dedication to upholding the fiduciary standard for clients. When not working, Chris spends time at home in Appleton, Wisconsin with his wife, Kayla, and two young daughters, Winnie and Marlee. Chris grew up in Colorado and is a rabid Denver Broncos fan that can trace his legacy season tickets back several generations!   Chris enjoys traveling, attending live concerts and watching just about any type of sporting event. To learn more about Chris, connect with him on LinkedIn.