Everyone loves to have a 401(k) plan, but no one wants to do the work that goes into running it. Well, we do, because that’s our job and we love it, but most small-business owners do not share our enthusiasm. And we don’t blame them! Your business is your business, and ours is making sure you don’t have to worry about your 401(k) plan. There’s a lot not to worry about when you work with 401GO, but we’re only going to list the top 5, because we’re sure these are all that’s needed to motivate you to make the leap.
1. A Long and Arduous Setup Process
One of the most off-putting aspects of selecting a 401(k) plan administrator and setting it up is the time it takes. According to ADP, one of the country’s largest payroll processors, it takes 30-45 days to set up a 401(k), and 60-65 days to switch plan administrators. This is just their estimation, however; it can sometimes take even longer.
ERISA laws mandate that any company sponsoring a 401(k) plan select a plan administrator. Traditionally, these have been investment firm giants like T. Rowe Price and Charles Schwab. As you can imagine, if you choose one of these firms as your plan administrator, you will likely not be one of their most important customers. That’s not to say they won’t treat you fairly, just that how busy a plan administrator is can be a factor in how long you have to wait to get your plan set up.
At 401GO, we have mastered the art of the quick setup. You can start your 401(k) plan in as little as 15 minutes. How do we do it? Our system was designed to understand the needs of small companies. It will ask some questions about your business, your employees and your preferences, and it will use these to suggest the best plan design.
The difference is conceptual. Small companies and big corporations have different needs. The big guys have their big plan providers, and you have 401GO.
2. Tracking Eligibility and Sending Employee Notifications
If you thought setting up the plan was a headache, that’s nothing compared to the ongoing administration. Small-business owners must make employees aware of who is eligible to participate, and then ensure that deductions are made each pay period and that the contributions are deposited correctly and in a timely manner.
Most businesses have 15 days to deposit your contribution into your account, seven days if there are fewer than 100 plan participants. Failure to do so can result in fines and penalties, and even imprisonment. It’s easy for HR or your accountant to make a mistake, and usually penalties are less severe for honest mistakes, but it’s still nerve-racking to think about.
When you work with 401GO, you don’t have to worry about tracking eligibility, making correct and timely contributions or sending employee notifications — we do it all for you. We’re the set-it-and-forget-it of 401(k) plan administrators.
3. Filing Required Annual IRS Forms
The most important IRS form required for small businesses that sponsor 401(k) plans is Form 5500. Form 5500 requests information that shows that small businesses are following ERISA laws. This includes demonstrating the plan’s qualifications and operations, as well as its financial condition and what investments have been made. We take care of this for you because we have all this information right at our fingertips, and we are well-versed in filing Form 5500.
You probably know that mistakes made on any IRS forms can lead to unpleasantness, but mistakes made by small businesses are a much bigger problem than mistakes made by individuals.
Additionally, wage and tax statements may be necessary as well as Form 990 and Form 945. We take care of all of these.
4. Managing Loans and Distribution Requests
So much of managing a 401(k) is about payroll deductions and account deposits that some small-business owners forget about distribution, thinking of it as far down the road. And it can be, but the goal is for everyone to get there. How are distribution requests handled? Suffice it to say that we handle them — you don’t even have to think about them. As your employees reach retirement age and are ready to draw on the funds they spent so many years accruing, we’re here to take care of that.
If any of your employees need loans, we can handle that as well. It’s not unusual for investors to look to their 401(k) to help finance major expenses like a home down payment, college tuition or some type of emergency. It’s best to let a 401(k) grow without it being disturbed, but it’s not always possible. And when your employees need a loan, we’re there to manage it for them.
5. How to Deal with Problems
We make it sound easy to become a 401(k) plan sponsor, and that’s because it is. But only because we work so hard to make it so. We have many collective years of experience in the finance and tech industries, and that’s how we were able to conceive of a better way to start a 401(k), and to make it happen for small-business owners across the country.
But that doesn’t mean you won’t ever have questions or concerns about your 401(k) plan and how it operates. And we’re here to answer those questions for you. We are known for our responsive, attentive customer service, and our clients both rely on us and trust us to provide timely answers and solutions. Get started with your 401(k) plan with 401GO today.