4 Things Business Owners Need to Know about Employer-provided Retirement Plans

Offering an employer-sponsored retirement plan is a great way for business owners to attract and retain employees while lowering taxes. As an owner, you want to build a business that isn’t struggling with high turnover rates, and you also want to get systems in place to keep things running smoothly without you having to oversee every single aspect. Increased tax incentives due to the latest SECURE Act updates don’t hurt either. But incorporating or re-evaluating an employer-sponsored 401(k), 401(k) Roth, SEP IRA, or SIMPLE IRA isn’t simple. As a business owner, you have a lot on your plate already, and a misstep in providing a retirement plan to your staff could leave you liable and in trouble with the IRS. Here’s what you need to know before choosing an employer-sponsored retirement plan. 

Choose an Investment Advisor 

Chances are, sorting through investment options is not what got you into business. Unless financial planning is your area of expertise, it’s best to delegate to an investment adviser representative. They‘ll help choose the funds that will make up your employer-sponsored retirement plan and monitor investments to make sure nothing needs to be shifted around. They can also offer coaching and strategies to your employees to meet their retirement-planning needs. Lowering your workload while helping your staff know how to enroll and why they should enroll in the first place is a win-win. 

Work with an Investment Company 

Before implementing an employer-sponsored retirement plan, you should choose an investment company to hold the assets. Again, delegating this step is one of the best ways to provide your employees and company with retirement-planning benefits without overcrowding your workload or liabilities. An investment company can work with your advisor to invest according to the direction provided. Another huge benefit of working with a professional investment company is the resources they can pass along to your staff. They can streamline employee access through user logins or even an app, which allows your staff to check their accounts and move funds as needed. 

Take Advantage of a Third-party Administrator 

Most business owners don’t realize just how much work goes into an employer-sponsored retirement plan behind the scenes, even if they already have a plan in place. Providers need to ensure their provided plan has compliance and non-discrimination testing done to ensure it benefits all employees equally, not just certain demographics. This is not something business owners want to attempt to oversee on their own because it only adds unnecessary risk. A third-party administrator can help dot every I and cross every T, keeping you in the clear with the IRS, along with handling the tax filing and legal planning documents. They can even help design your employer-sponsored retirement plan to ensure it meets your company’s demographics and goals. 

It’s Okay to Change Your Plan

The employer-sponsored retirement plans available to business owners vary– there’s no “one-size-fits-all.” Because of this, as your business grows and settles into its identity, shifts, or experiences a leadership change, it’s a good idea to evaluate whether or not your existing plan still fits the company’s needs. Leadership transitions and shifting workforce needs often merit a switch-up, and there’s nothing wrong with that. Leaning on professionals to help with this step can streamline growth or change. 

No matter if you’re ready to offer retirement benefits to your staff for the first time, navigating a business transition, or taking inventory of current business needs, relying on professionals to help can ease your responsibilities while freeing up your calendar. At Lighthouse Wealth Group, we’re passionate about equipping business owners to navigate every aspect of their professional and personal finances. That’s why our services include fee auditing for current employer retirement plans. If you need to clear some tasks off of your plate or just need a reliable second opinion, reach out to meet with us. 

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Lighthouse Wealth Group and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.