Menu
Menu
401(K)
What Business Owners
Need to Know
Take this page with you as a PDF
1
Introduction
to 401(k)
VALUE. SERVICE. FLEXIBILITY.
These are the hallmarks of a sound, efficient retirement plan and the basics used by Employers Resource in building a nest egg that you and your employees can count on for years to come.
Working with the professionals at Slavic401k, we guarantee that your qualified retirement savings plan will be administered seamlessly and efficiently. With Slavic, you can keep track of activity in your plan, monitor employee participation, download pertinent reports and much, much more.
2
What is
a 401(k)?
PROTECT YOUR DREAM OF A HAPPY RETIREMENT
A 401(k) is a retirement savings plan. Employers who sponsor a 401(k) plan allow employees to save and invest some of their paycheck before taxes are deducted. Taxes are paid when the money is withdrawn from the account.
Employees decide how much of their salary they want to contribute toward their 401(k) plan, up to the the maximum yearly amount set by the IRS’ 402(g) limits, which is set at $18,500 for 2018. Some employers may make matching contributions up to a certain percentage of employee contributions, but are not required to do so.
These contributions are automatically deducted from their paycheck before taxes are deducted. Those contributions are then invested at the employee’s direction by a third-party 401(k) provider into various funds available in the 401(k) plan. Those investments then grow over time while in the employee’s 401(k) account and taxes are only paid at the time when money is withdrawn.
Whether your dream of a happy retirement seems like a lifetime away, or is just around the corner, contributing to the right 401(k) plan makes that dream closer to reality every day.
3
Five Reasons You Should
Offer a 401(k)
1
YOU’LL SEE COST SAVINGS
THROUGH STRONGER RETENTION
Happy employees leads to improved retention rates which means cost savings in the long run for your business. What makes happy employees? Savings plans and competitive benefits definitely helps. According to Plan Adviser, nearly 40% of employees say they would take a new job if it provided a 401(k).
2
EMPLOYEE RECRUITING SUDDENLY
BECOMES EASIER
Employees looking for a new job probably have their eggs in a few baskets at the time you’re interviewing them. If they’re looking at two promising opportunities, they’re probably going to compare benefits packages. A strong savings plan like a 401(k) is a valuable bargaining chip in the hiring process.
3
EMPLOYER TAX SAVINGS ARE
AVAILABLE
Employers who offer a pre-tax retirement savings plan will see tax savings similar to the employees’ tax savings. You’ll get a tax benefit from paying FICA and deferrals are tax free. So, you do not have to pay taxes on money deferred from employees into the 401(k) plan.
4
IT HELPS SMALL BUSINESS OWNERS
SUPPORT THEIR OWN RETIREMENT
Many small business owners push their own needs to the side so they can focus on their business and their employees. One of the advantages of offering a 401(k) savings plan to your workers is you get one too!
5
IT SUPPORTS TO YOUR LOCAL
ECONOMY
When employers provide a livable wage, savings assistance, and eventually a secure retirement they help boost not only their local economy but the whole country too. We think as employers and entrepreneurs this is our duty to our country and our loyal employees. This is what makes the American dream a reality.
As a small business, it might seem impossible to afford employee benefits like a 401(k) plan. Things like hidden fees, setup and annual fees, paperwork, compliance headaches, and liability of investments performing poorly might make it seem not worth the hassle. However, these details do not have to get in your way.
To avoid these barriers, many small business owners are choosing plans provided by a Professional Employer Organization because it provides the multiple employer advantage and administration services.
Here are just some of the benefits of getting a 401(k) plan through a PEO company:
- Co-employment which means you and the PEO share ownership of the plan which offers small businesses much needed protection.
- No administrative headaches, the PEO takes care of necessary compliance and paperwork for you.
- You only have to pay one simple and affordable annual enrollment fee.
- Enrollment is easy. You simply select your plan options with the PEO and serve as a co-sponsor of the plan.
4
The Importance of 401(k)
Plans in Employee Recruiting
BETTER BENEFITS ATTRACT BETTER
EMPLOYEES
When people think about their employment, they rarely do so without at least somewhat looking ahead to where they hope to be in the future. Everyone has their own dreams and aspirations they hope to one day achieve, and a huge factor in making that a future reality for most people is financial stability. One great way to appeal to this desire when recruiting is by offering a 401(k) to your employees.
There are many reasons your small business should be offering a 401(k), and both recruiting and retention are among the strongest of those. Offering a 401(k) is a great way to set your company apart from the competition when it comes to hiring the strongest candidates available. As we have written previously:
“Employees looking for a new job probably have their eggs in a few baskets at the time you’re interviewing them. If they’re looking at two promising opportunities, they’re probably going to compare benefits packages. A strong savings plan like a 401(k) is a valuable bargaining chip in the hiring process.”
5
The Secret to Offering a Great
401(k) Plan Without the Hassle
HERE’S A SECRET
So you want to offer a 401(k) plan, but you’re worried that the costs outweigh the benefits? Maybe you’ve heard of the headaches that employers often inherit with the plan? There’s a secret that allows employers to offer a 401(k) plan as a benefit without being completely overwhelmed by the plan administration.
It’s all about choosing the right 401(k) plan solution.
WHY OFFER A 401(K) PLAN?
After health-related benefits, employees most commonly reference a 401(k) plan when looking at desired benefits. However, many employers choose not to offer a 401(k) plan because they believe it is too much of a burden. They simply don’t see the payoff.
Here are a few benefits for employers who offer a 401(k) plan:
- Happy employees = Improved Employee Retention = Cost Savings.
- Employee recruiting.
- A strong savings plan offering like a 401(k) is a valuable bargaining chip during the hiring process.
- Employer Tax Savings.
- Employers offering a pre-tax savings plan save in tax costs.
- Also, employers with 401(k) plans can receive special tax credits from the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA).
HOW 401(K) PLANS BECOME COMPLICATED AND
BURDENSOME FOR EMPLOYERS
For many employers the cost of administering a plan simply outweighs the benefits. For example, employers with 100 or more employees typically have to pay a fee $10,000 annually (see section above discussing MEP vs. SEP Plan Sponsor Duties).
Elements of 401(k) plans that typically create complexity and burden:
- Employer’s liability of poorly performing investments.
- Fiduciary compliance headaches.
- Employers usually have to deal with a lot of paperwork, compliance communication, and documentation to remain compliant and qualified.
- Hidden and/or back-end fees.
- Setup fees and annual fees.
- Lack of employee buy-in.
THE SECRET TO AVOIDING THE HASSLE OF 401(K)
PLANS
Here’s the secret: Plan Administration Outsourcing.
What does that mean? Instead of going directly to a provider and administering the plan yourself, which means you have all the administrative responsibilities, choose a 401(k) solution where these burdens fall on someone else. This allows you to enjoy the benefits of offering a 401(k) without dealing with the headaches.
This typically means selecting a plan provided by a Professional Employer Organization or other providers that offer 401(k) plan administration outsourcing. PEO companies specialize in providing outsourced solutions for various administrative duties related to HR areas such as payroll, benefits and workers’ compensation.
Here’s how a PEO can offer you a 401(k) plan without the hassle:
Fiduciary Protection
You share ownership of the plan, which can offer the fiduciary protection so greatly needed by employers.
Simple Enrollment
With a PEO you just select your plan options and serve as a co-sponsor of the plan.
One Annual Payment
With the Employers Resource PEO solution, you only have to pay one simple and affordable annual enrollment fee.
Less Paperwork
We take care of the necessary compliance and paperwork, which means no more headaches for you!
ENJOY BETTER BENEFITS WITHOUT THE HASSLE
You can benefit from a strong 401(k) plan offering while the PEO takes care of all the work necessary to hold and maintain the plan. This is just one of many examples of how a PEO allows small business owners to offer complex (and sometimes out of reach) benefits to their employees without the usual costs and hassle of administering it themselves.
6
Are All 401(k)
Plans Equal?
The 401(k) Plan- Even with the best intentions, and with good returns, when it comes to meeting plan sponsors’ fiduciary responsibilities, it’s just not enough. Although a strong 401(k) plan can be a great retention tool for employers trying to hold onto valuable employees, liability tends to go well beyond poorly performing investments. In fact, it is essential that plan sponsors exercise complete diligence in selecting and monitoring all investment options. Enter the Multiple Employer Plan.
Multiple Employer Plan (MEP) – a retirement plan for businesses that typically share a common interest (PEO) but do not share ownership, which can offer the fiduciary protection so dearly needed by plan sponsors. sponsors exercise complete diligence in selecting and monitoring all investment options. Enter the Multiple Employer Plan.
In fact, according to the 401kHelpcenter.com, small employers rank maintaining fiduciary compliance among the top of all concerns associated with sponsoring a retirement plan. So in the same way plan sponsors strive to protect the best interests of their employees, Employers Resource can help protect plan sponsors by offering our clients membership in an MEP through Slavic.
A 401(K) PLAN CAN BE A WOLF IN SHEEP’S CLOTHING
Sometimes retirement savings plans can turn bittersweet as your employees discover the hidden/back-end fees that these 401(k) plans often have like 12B Transactions and other sneaky transactions. There have been recent crackdown on 401(k) providers to be more transparent and be more forthright concerning hidden costs and fees related to their services. Slavic401k had been compliant with the new laws well before they were implemented. Simply because, like Employers Resource, they believe that if you treat people well, they have reason to stick around.
EMPLOYERS RESOURCE’S SLAVIC401K PLAN
Offering a 401(k) plan as an elected benefit is a great option to have for your employees. Employers Resource not only offers you the benefit of being part of an MEP plan opposed to a SEP plan (see comparison below), we also partner with one of the most trusted names in the 401(k) industry, Slavic401k. Slavic401k offers a great alternative to other plans which are expensive, burdensome, and full of liability. They specialize in cost-effective offerings with the PEO arrangement.
Our clients benefit from the long-standing relationship we’ve enjoyed with Slavic401k. We believe that our Slavic401k is the best in the country. We chose Slavic401k plans early in our years and we are so thankful that we did. We’ve had a great relationship with them ever since.
MEP VS. SEP
Normally an employer that has over 100 employees, with a 401(k) retirement plan, is required to pay for a mandatory audit costing over $10,000 each year. Our clients don’t have that cost because they are in what is termed an MEP as opposed to a Single-employer Plan (SEP). Many businesses outside the PEO world use a SEP. With an MEP, there is one of these audits performed for the entire group, rather than for each client. Providing what we think is the best 401(k) plan in the country is a huge benefit to the employers we work with.
THE BREAKDOWN
Here’s a breakdown of MEP vs. SEP Plan Sponsor Duties. Which one looks easier to you?
BEFORE
Plan Sponsor duties BEFORE joining a Multiple Employer Plan
- Design plan document and maintain qualified status
- Appoint and monitor all other plan fiduciaries.
Plan Investment Fiduciary duties
- Produce and maintain an Investment Policy Statement (IPS)
- Select investment platform meeting ERISA “Prudent Person” standards
- Conduct Investment Committee meetings
- Review and document investment returns, fees, expenses, and comparisons to peer group
- Monitor all investment options and remove or replace as appropriate
- Operational Plan Administrator duties
- Determine participant eligibility
- Conduct enrollment and educational meeting
- Send out enrollment packets including Summary Plan Description (SPD), 404(c) Compliance
Information, Qualified Default Investment Alternative (QDIA), and Explanation of Expenses
- Comply with ERISA Section 2550.404(c) provisions for participant communication, including but not limited to:
- Notice to participants of intention to comply with 404(c)
- A description of investment alternatives available in the plan
- General description of the investment objectives and risk and return characteristics of each alternative
- Description of transaction fees and expenses that affect the participant’s account balance
- Specified information regarding the plan fiduciaries
- A description of the annual operating expenses of each designated investment alternative
- Copies of prospectuses, financial statements, and reports provided to the plan
- Address specific participant requests and/or instructions in compliance with 404(c)
- Administer participant loans in compliance with statutory requirements
- Send out Participant Termination packets
- Administer distribution and rollover requests for ex- employees
- Administer hardship withdrawals in compliance with the Hardship Rules, included in new provisions of PPA of 2006
- Oversee annual census reconciliation with TPA
AFTER
Plan sponsor responsibilities AFTER joining a Multiple Employer Plan
- Select customized plan design options to meet your business needs
- Serve as a co-adopter of the plan
Offering savings, benefits, and retirement-related benefits are crucial for attracting and retaining talent.
7
Advantages of Multiple
Employer 401(k) Plans
CONSIDERING A 401(K) PLAN WITH EMPLOYERS
RESOURCE?
Please watch the following video that provides an overview of the advantages of our Multiple Employer Slavic 401(k) Plans we are proud to offer to our clients.
This video covers our Slavic 401(k)’s advantages, such as:
- Outsourced fiduciary
- Customization otpions
- The plan document costs are included
- Investment platform
- Investment advice
- TPA services
- No additional administration costs
- Fiduciary liability
For our clients and employees already taking advantage of these plans, we also have a new enrollment video to view on our 401(k) plan info page or by clicking on the image below. This video provides an overview of the plan, how the 401(k) works, loans and hardships, fees, investment info, risk, services, and how to enroll.
8
Why Employers Love
Our Slavic 401(k) Plan
When considering a 401(k) plan, many employers often think the hassle of setup and administering a plan outweighs the benefits of offering a plan to their employees. This is a valid concern since 401(k) plans can be complex and most providers simply overwhelm their clients with details and options that carry hidden costs and fees. With our Slavic 401(k) plan, we offer an easy turnkey solution for employers to make purchasing a 401(k) plan simple and beneficial for employers.
We have a strategic partnership with Slavic401k, who specialize in working with Multiple Employer 401(k) Plans like Professional Employer Organizations (PEOs). Employers Resource has enjoyed a long and successful partnership with the people at Slavic. We chose Slavic well before they become the standard in the 401(k) space and we plan to keep working with them for many years to come.
Business owners are proud to offer their employees Slavic 401(k) plans, and here’s five reasons why
1
WHAT YOU SEE IS WHAT
YOU GET
Slavic 401(k) plans have been transparent with no hidden fees since before it was a focus in the 401(k) space. Our participant fees are disclosed as a line item on the participant’s statement. Fees are not “hidden” in the investment returns.
12b-1 fees paid to Slavic are credited back to the individual participants that own the fund. This enhances investment performance and ensures absolute objectivity in fund recommendations.
2
COMPLETE
ADMINISTRATION
If you’re looking for a way to offer a great 401(k) plan without the hassle, we’ve go you covered. Just one initial quick and easy plan design and set-up consultation and you’re off and running for years to come.
We handle all of the administration for you. We handle eligible participant notification, non-discrimination testing, loan and distribution processing, trustee services and a 5500 preparation is included as part of the Multiple Employer Plan.
For an overview of our plan, view our video: The Advantages of Multiple Employer 401(k) Plans
3
PLAN
FEATURES
Even though we make it simple for the employer, our 401(k) plans are feature rich and offer the accessibility your employees will expect. You and your employees can track your activity, you can monitor employee participation, download reports and much more. Just login and create a user ID and you’re ready to go. With Sponsor Express you can have a monthly plan summary e-mailed to the sponsor.
4
COST
SAVINGS
You will be saving money since there are no hidden fees and there is only a one time setup fee of $400. And you save time by not adding another vendor you have to correspond with for your 401(k), just Employers Resource as your complete PEO solution provider.
5
EMPLOYEE RECRUITING
AND RETENTION
Adding our Slavic 401(k) plan to your employee benefits package is a great way to strengthen a weak benefits plan. You end up a hero for allowing your employees to have a great option for their retirement, and the cost to you is next to nothing!
SIMPLE. UNDERSTANDABLE. TRANSPARENT.
Offering a 401(k) plan doesn’t have to be complex, confusing, and full of traps or hidden fees. With our Slavic 401(k) plan, we make it simple and transparent and simply take care of everything for you while you get to relax and enjoy offering it to your happy employees.