The Free 401(k) Plan

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A 401(k) generally has a stigma of being too expensive and too time-consuming for small businesses in particular. The reality is that it doesn’t have to be. It can be simplified and it can be affordable. It’s that perspective that we hope to change at 401GO. Simple and affordable 401(k) plans shouldn’t be out of reach or a byword for complicated.

Step One: Decide to Offer a 401(k)

If a company hasn’t thought about sponsoring a 401(k) plan or some retirement plan for its employees, we would encourage a switch in thought. Saving for retirement and preparing for the future may seem a distant goal, but it would be even farther out of reach if there is no plan in place. The first step is to decide to have a 401(k) plan. I would suggest that this is something that is included in your discussion of other benefits, and not tossed in at the last second as an add-on for employees. Look at it as a crucial benefit that you wouldn’t want your employees to go without.

Why? Because it is every bit as important as any other benefits offered.

401(k) plans can be simplified and made easy through technology and automation. We cut out the difficult portion through the plan design offering to make it easy and understandable. Now, if you can simplify a 401(k) plan, what do you do about cost?

Well, the reality is that if you have 50 or fewer employees, you can essentially sponsor a 401(k) plan for free. Free? Yes, free! “Free.99.”

Step Two: Claim Your Credits

Companies with 50 or fewer employees that have not offered a qualifying retirement plan in the past three years and start a new 401(k) plan get the most tax benefits.

Here’s how it works.

First, set up a 401(k) plan through 401GO. 401GO helps with all the difficult stuff during and after setup.

Next, you pay just $9 per participating employee each month (and depending on the plan you choose, maybe a small base fee and AUM fee).

Finally, at the end of the year, you claim some pretty substantial tax credits for starting a new 401(k).

Since the SECURE Act 2.0 was passed, the tax credits for new plans cover all your administrative expenses.

  • The startup administrative credit covers 100% of administrative costs for 3 years.
  • The auto-enrollment credit give you an additional $500 per year for 3 years if you include auto-enrollment as a plan feature.
  • You can even get credits of up to $1000 per employee for your matching contributions on a diminishing scale over 5 years.

So, let’s recap. If you have 50 employees and ALL 50 of those employees are participating, then your total cost for the year is roughly $5,400 through 401GO. You write off all of that with the startup administrative tax credit, and BAM! You now have the most affordable 401(k) plan ever along with the technology and automation of an amazing provider like 401GO.

Win. Win. Win.

For more information on the free 401(k) plan, please contact us. We’ll help answer any questions you may have.

Learn more about our 401(k) options optimized for small and medium sized businesses.

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Jared Porter
Jared is 401(k) expert and early-morning basketball enthusiast. He enjoys explaining complicated retirement issues in simple ways.

Learn more about our 401(k) options optimized for small and medium sized businesses.

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