How To Set Up A 401(k) Plan for Your Employees In 6 Steps
James Zahansky, AWMA®
Principal/Managing Partner, Investment Advisor & Chief Goals Strategist
If you're considering offering an employer-sponsored retirement plan, a 401(k) is a popular option for small businesses and large corporations alike. Offering a retirement plan can be an effective tool in attracting talent and keeping employee satisfaction high – critical factors in today’s competitive labor market.
According to the latest U.S. Census information, in 2020 there were about 600,000 401(k) retirement plans with over 60 million active participants.1 If you’re considering jumping into the mix by offering a retirement plan like a 401(k) to your employees, it’s important to understand how to choose the best plan for your business, and how to properly administer the plan once it’s set up. To help you get started, here are the basics of building and maintaining a 401(k) plan, broken down into six steps.
Step 1: Identify & Align Your Business’s Goals and Needs
Each business is different, and it's likely that you and your employees may have unique goals and needs. So how do you choose a 401(k) plan that aligns with those goals and needs? Talk with an experienced financial advisor. He or she can go over what you want to achieve and help you choose the right plan.
Step 2: Compare 401(k) Providers for Cost and Value
Overwhelmed by the various options when it comes to 401(k) providers? A financial advisor can provide a breakdown of costs and discuss the value of various providers to help you find a good fit.
Step 3: Stay Up-to-Date on Legislative Changes
As government policy changes, retirement plan rules can be affected. While you’re busy running your business, your financial advisor will let you know when changes are made to retirement plan rules that could affect your plan or responsibilities as a sponsor.
Step 4: Educate Participants & Encourage Participation
It’s not just about creating the 401(k) plan, you want your employees to participate as well. By holding information sessions for your employees, an advisor can answer their questions, encourage participation and review the benefits.
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Step 5: Evaluate and Monitor Investments
A financial advisor can guide you when it comes to making informed decisions about your business, your retirement plan and its investments. He or she will have a monitoring process with periodic check-ins to help keep you up-to-date.
Step 6: Offer Administrative Support
The administrative duties involved with maintaining an employer-sponsored retirement plan can be daunting for small business owners. If you find yourself with limited time and resources to put towards these administrative duties, a financial advisor can help. He or she can guide you, support your needs as a plan sponsor and help align your plan with your business’s needs.
A 401(k) plan offers benefits that will help you not only attract but keep good employees. Hiring a financial advisor to help establish and maintain that plan can put you at ease and confirm that you’re checking all the boxes. At Weiss, Hale & Zahansky Strategic Wealth Advisors we help business owners get set up to successfully achieve their goals – including establishing a 401(k) plan – through our Plan Well, Invest Well, Live Well™ strategic process. To learn more about how we can help you and your business, contact us at (860) 928-2341 or visit our website to request a complimentary consultation.
Presented by Principal/Managing Partner James Zahansky, AWMA®. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259 and 392-A Merrow Road, Tolland, CT 06084. 860-928-2341. www.whzwealth.com.
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