3 Problems That Make Your Small Business 401(k) Plan Too Expensive (and How to Fix Them)


Business owners, financial planners, and HR professionals recognize the savings power of 401(k) plans for clients and employees. For small business owners, a 401(k) plan helps their employees secure better futures. It also serves as a recruiting tool and compensation differentiator, helping their organization stand apart from the competition in a candidate-driven job market.

Financial planners at smaller firms also reap the benefits of offering a cohesive retirement savings plan to clients. These advisors recognize that helping clients strategically contribute to a 401(k) plan allows them to build trust and rapport; these financial professionals initiate the relationship with retirement savings as a way to establish their expertise and work toward other savings vehicles.

Many 401(k) Plans Are Cost-Prohibitive for Small Businesses

While 401(k) programs offer invaluable employee and client benefits, most smaller business owners quickly realize that many of the available plans are too pricey for their budgets and current operations. They assume options are limited, and these programs are simply too expensive to run with long-term sustainability. As a result, entrepreneurs and advisors may opt to forgo providing a plan altogether, believing that it’s just not worth the expense.

Sound familiar?

If you’re struggling with the high cost of offering a client or employee retirement plan, you may not want to give up just yet. Understanding some of the factors that drive the expense of retirement savings plans (and how to resolve them) can help identify an affordable 401(k) program for your business. Some key reasons your employees’ retirement savings plan is too expensive may include:

Problem: Using a Traditional Plan for a Modern Small Business

Many small business owners and HR professionals assume that conventional retirement savings plans are the only option available. However, traditional 401(k) savings vehicles are often inherently designed for larger organizations with an extensive workforce. Unfortunately, these programs are often riddled with fees and hidden costs for participating companies that don’t meet the minimum requirements.

Problem: Utilizing Internal Resources to Manage Plans

It’s no secret that traditional 401(k) programs often require a designated internal resource to manage, well, everything. From enrollment and plan contributions to maintaining compliance and answering questions about overall investment value, there’s a lot that goes into keeping a conventional 401(k) plan on track. Many small businesses have to appoint (and pay) an internal employee to oversee their plan and documentation. Not only can this increase the expense of the program, but it can also limit that staff member’s ability to work on other, more urgent projects and initiatives.

Problem: Partnering With the Wrong Vendor

Pricing structures on traditional employee retirement savings plans are often not transparent. These products may use an outdated pricing structure that makes it difficult to discern just how much you’re paying to your provider, even after assessing the fee disclosure.

Digital 401(k) Technology Eliminates Unnecessary Plan Expenses

The good news? Modern small businesses don’t have to settle for the same restrictive, traditional 401(k) plans that gave previous generations of business owners a significant case of sticker shock.

Solution: New Innovative Digital Solutions

Innovative digital solutions for your small business 401(k) are specifically designed for smaller companies, eliminating the risks and costs associated with non-compliance or failing to meet minimum requirements.

Solution: Access to Trained Professionals

Leading providers of online retirement plans don’t just provide the software — they also offer quick and easy access to trained professionals who can oversee the program for partners. These digital 401(k) savings products empower employees and financial clients with everything they need to manage their investments themselves.

Bonus: Your plan partner will also have resources standing by to coordinate the process and answer questions, eliminating the need for a dedicated additional internal employee.

Solution: Identify the Right Program with Low Flat Monthly Fees

Most importantly, the right online retirement savings plan will offer a low flat monthly rate per employee to keep costs as low as possible throughout the partnership. No more guessing games or struggling to identify fee disclosures. You will have the opportunity to identify the right program to suit your needs and assign a flat monthly rate for every participating employee or client for a single, low payment every month.

Let 401GO Make Retirement Savings Easy and Affordable for Your Small Business

401GO helps small businesses streamline retirement savings for employees and clients — all at a flat monthly rate per employee. Contact us today to discuss your specific 401(k) savings needs.

Secure your future today. Enroll in your 401(k) plan now.

Jennifer Stott
Jen is experienced at creating and managing marketing content and blogs. She enjoys communicating about this complex industry.
Secure your future today. Enroll in your 401(k) plan now.