When it comes to retirement planning, having a reliable savings strategy in place is key to ensuring financial stability for the future. However, with the variety of retirement plans available today, it can be difficult to choose the right one for your needs. Two prominent options for businesses and individuals are 401GO’s GO-Starter plan and state-offered retirement programs. Both provide solutions for retirement savings, but they differ significantly in their structure, benefits, and implementation.
Let’s break down the differences between these two retirement plan options.
What is 401GO’s GO-Starter Plan?
401GO’s GO-Starter is an innovative and simplified 401(k) plan designed for small businesses, startups, and self-employed individuals. Unlike traditional 401(k) plans, which can often be cumbersome to set up and manage, GO-Starter offers an easy-to-use platform with minimal administrative complexity. The goal of 401GO’s platform is to provide a user-friendly retirement savings option without the need for a dedicated HR or finance team.
One of the standout features of the GO-Starter plan is its low cost. It eliminates many of the fees that are typically associated with traditional retirement plans, making it a cost-effective solution for smaller businesses that may not have the resources to offer complex benefit packages. Additionally, GO-Starter includes features such as automatic payroll integration, employee enrollment, and an intuitive dashboard for employers to manage their accounts.
This plan also offers flexibility in terms of contribution levels, allowing both employees and employers to contribute to the retirement fund. GO-Starter helps employees to begin saving for retirement without the need for complicated paperwork or investment knowledge.
What are State-Offered Retirement Plans?
State-offered retirement plans are a growing initiative aimed at helping workers who do not have access to an employer-sponsored retirement plan. These plans are available in states that have implemented mandatory or voluntary programs to address the increasing number of individuals who are not saving for retirement. Some well-known examples include California’s CalSavers, OregonSaves, and Illinois Secure Choice.
State-offered plans are primarily designed to help individuals who work for businesses that do not offer retirement benefits. In these states, employers are required to either offer the state retirement plan or offer a different type of retirement option from a private provider. Using the state-run programs, employees can contribute through payroll deductions, and the state typically manages the investment options. Unlike 401(k) plans, state-offered retirement plans are often set up as Roth IRAs, which means they may have different tax benefits and withdrawal rules.
One key advantage of state-offered plans is that they are highly accessible to workers who otherwise wouldn’t have access to retirement savings. For employers, offering these plans comes with fewer administrative burdens compared to setting up a private retirement plan like a 401(k). However, the investment options within state-offered plans may be more limited, and employees don’t have the same level of control over their savings as they would with a 401(k) plan.
Key Differences Between GO-Starter and State-Offered Plans
- Eligibility & Access: GO-Starter is designed for small businesses who want to offer a 401(k)-type plan to their employees. It is designed to be generally accessible to almost all employees who live in the U.S. In contrast, state-offered programs are available only in specific states and only for employees who reside in that state.
- Plan Type: The GO-Starter plan is a 401(k) plan, which provides both employees and employers with the opportunity to contribute to a retirement fund. On the other hand, state-offered plans are often structured as IRAs, typically Roth IRAs, meaning they are owned by each individual employee and not the employer.
- Control & Customization: With 401GO’s GO-Starter, employers have more flexibility in terms of plan structure and investment options. Employees also have a wider range of choices for their contributions. State-offered programs are not plans, and therefore have few, if any, customization options.
- Administrative Effort: Both options aim to simplify the process of retirement savings, but the 401GO plan is particularly designed to minimize administrative costs and workload for businesses with automation technology. State-offered programs require some work on the part of employers, to maintain a current employee census and educate new hires about the program.
- Investment Options: 401GO offers a broader selection of investment options for employees compared to most state-offered retirement plans, which typically have limited choices managed by the state.
Conclusion
Both 401GO’s GO-Starter plan and state-offered retirement plans serve a vital role in helping individuals save for retirement, but they cater to different needs and situations. GO-Starter is a more flexible, customizable solution for small businesses and self-employed individuals who want to offer employees a traditional 401(k) retirement plan. State-offered retirement plans, meanwhile, are a simpler, more accessible option for workers in states where businesses are required to participate. Choosing the right option will depend on your specific needs—whether you’re a small business owner, an employee, or an individual looking to secure your financial future.
