If you’re a business owner, you know that your employees are one of your greatest assets. Setting up an employee 401k plan for your workers will help your employees to plan for their future, which will increase company loyalty. As an employer, your contribution to the account is tax deductible, and your workers can receive important benefits as well.
One of the first things you’ll need to do is choose an employee 401k plan that will work best for your company. There are several different types, such as the Simplified Employee Pensions, Savings Incentive Match Plans, and Qualified Plans. Take a look at the IRS publications 560 and 3998 in order to get more details about your options before you present plans to employees.
Next, it’s time for you to select a company that will offer you a plan based on the type of business that you run. Search for names like Edward Jones, Wells Fargo, and American Funds. These companies have great employee 401k plan options that will benefit your workers. However, some organizations are just for small businesses, and some are more suited for larger corporations. Contact a representative from each of the companies to find out what is best for your business before you sign any paperwork.
You should also get a clear understanding of your financial responsibilities as an employer when you’re selecting an employee 401k plan. How much control do you want to have over the plan? What are you promising your employees as far as financial benefits are concerned? This may be a good time to hire a financial advisor for your company so that you can get a clear understanding of the plan that you’ve chosen. Then, you’ll be able to explain control functions to your employees, and you can refer them to the right sources for more information. IRS publication 4222 will also provide you with more detailed information on the way that money needs to be distributed in a retirement plan.
Once you’ve decided on the plan that you’re going to use for your employee 401k plan, you should give your workers a variety of fund options to choose from. During this time, you’ll also need to adopt a written plan for distributing the funds, and you should determine an annual budget for this new financial structure. Your records department should be very aware of the decisions that you’ve made, since you’ll need to see that all your tax and investment information is closely recorded.
Setting up a tutorial with your employees will also help you to present information about the employee 401k plan you’ve chosen. Check out www.irs.gov for additional information.