Starting a 401(k) for my Business: Why and How

A 401(k) plan can be an excellent tool to invest in your employees. The benefits of a 401(k) are not one-sided and can benefit both the employer and employee. The employee gets the benefit of an additional retirement vehicle to save money, and the employer offers a more competitive compensation package to increase the retention of employees. However, there are some key elements that must be considered before starting a 401(k).

A 401(k) contains four different service providers that each have a unique role in the operation of the plan. These are the advisor, recordkeeper, fund lineup, and the third-party administrator. The third-party administrator is responsible for the plan design, reporting, compliance, as well as other operational aspects of the plan. The recordkeeper is responsible for tracking the assets for each participant. The fund lineup are the individual investments that are available in your plan. Finally, the advisor provides both education for the employees as well as monitoring performance and fees of the investments available at the plan level. At Duncan Williams Asset Management, this is done by regular participant education sessions where we have group and individual meetings for every participant as often as they like. Additionally, we establish an investment policy statement with the employer to continuously monitor the plan fees and performance.

Now that you understand the moving parts involved in a 401(k), what do you do to get it started? Duncan Williams Asset Management can help you decide the best providers for each of the parts of your plan while staying within your budget. Additionally, we continue monitoring these providers to make sure the plan continues to get the best service as it grows.

Employer-sponsored retirement plans such as a 401(k) can be a great way for an employer to give back to its employees. Additionally, it can be a great way for the employees to take the onus of their retirement. With all the uncertainty around the long-term scope of social security, it is important to take responsibility for your own retirement readiness. Whether you are a business owner looking to start a plan or a participant seeking advice, Duncan Williams Asset Management has advisors eager to help you achieve your retirement goals. Call us today. 901.435.4250