How to Optimize the Retirement Plan for Your Small Business

How to Optimize the Retirement Plan for Your Small Business

When it comes to operating a small business, no two days are the same! As a small business owner, do you have the time and the staff to keep up with the evolving 401(k) market?

Regulatory changes and the new entrants are presenting new risks for sponsors of retirement plans at small and mid-sized businesses. Today, the market is open with opportunities to reduce plan costs and pare the administrative burden long associated with offering a tax deferred savings plan.

Here we have listed a few broad ways to optimize your retirement plans for small business in today’s financial environment.

Stay Up to Date

Over the past couple of years, the Fiduciary Rule proposed by the Department of Labor has garnered a lot of attention. This rule is framed specially to raise advice standards for investment advisers and ensure investment costs are transparent. This new regulations have put a pressure on companies to accurately perform their 401(k) administrative duties that ever before. So, here are a few things you have to implement for your business.

  • Automate manual tasks which can free up staff time and reduce the risk of errors.
  • Automate error checks that allow you to correct any discrepancies quickly.
  • Comply with employee communications requirements.
  • Follow the rules regarding loan tracking, distributions, and make sure payments are remitted to 401(k) accounts on a timely basis.

Increase Plan Effectiveness

One of the best ways to improve the plan effectiveness is by lowering fees. Select providers with reasonable fees and have a clear understanding on how much each service is costing you and your employees.

Monitor the Investment Options

One of the key responsibilities of 401(k) plan administrator is offering appropriate investment options. The investments must be actively monitored to ensure that your options remain appropriate.

Employee Participation and Engagement

A high employee participation rate means the plan is more likely to pass IRS non-discrimination testing without a hitch. The information on your participation rate, and how that rate compares with other plans of a similar size will be given to you by your 401(k) plan provider.

Tax Efficient Plans

Making your plan more efficient can steer more compensation toward select employees in a tax efficient manner, allow the business to pay less in taxes, and boost the ability for employees to save for retirement.

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