401(k) Retirement Plans are fast becoming the primary source of savings for people to be able to retire. This makes it imperative that the Plan is “good,” but how should we define “good” for small plans? Every employer that sponsors a plan is different, as is every employee that participates in the plan. What makes a great plan for the employee may make it expensive for the employer. All of these items need to be considered when setting up or modifying a 401(k) plan.
The last few articles concentrated on the different types of retirement plans. Far and away, the 401(k) is the most popular retirement plan in today’s business environment. Many companies that sponsor a 401(k) plan do not understand the service providers who help them with their plan. To that end, we thought it would be a good idea to document the service providers for a “traditional” 401(k).
As we discussed in the prior blog there are many different options for a company that is interested in setting up a retirement plan. In the prior blog we discussed the IRA based options and in this article we will discuss qualified retirement plans such as 401(k)’s and Defined Benefit Plans.
As we discussed in the prior post “Why Should a Company Sponsor a Retirement Plan”, there are many reasons a company should sponsor a retirement plan. However, once an employer decides they want to implement a plan they need to decide which one. This can be confusing and it is our intent with these next couple articles to shed some light on the advantages and disadvantages of each option.
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Small employers often get to a stage in their development where they ask themselves if they should start a retirement plan for their employees and shareholders. This is often a difficult decision because of the complexities of the different types of plans, the costs to set up a plan and/or the responsibilities/liabilities in setting up a plan. I plan on discussing some of these issues in later articles, but this article focuses on some of the advantages to the employer and its shareholders.