3 Reasons Your Small Business 401K Plan is Too Expensive (and How to Fix It)
Business owners, financial planners, and HR professionals recognize the savings power of 401K plans for clients and employees. For small business owners, a 401K 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 401K 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 401K Plans Are Cost-Prohibitive for Small Businesses
While 401K 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.
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 401K program for your business. Some key reasons your employees’ retirement savings plan is too expensive may include:
Reason #1: 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 401K 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.
Reason #2: Utilizing Internal Resources to Manage Plans
It’s no secret that traditional 401K 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 401K 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.
Reason #3: 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 401K Technology Eliminates Unnecessary Plan Expenses
The good news? Modern small businesses don’t have to settle for the same restrictive, traditional 401K plans that gave previous generations of business owners a significant case of sticker shock. New innovative digital solutions are specifically designed for smaller companies, eliminating the risks and costs associated with non-compliance or failing to meet minimum requirements.
Additionally, leading providers of online retirement savings 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 401K savings products empower employees and financial clients with everything they need to manage their investments themselves. However, 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.
Finally, and 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 401K savings needs.