How to Evaluate Retirement Planning Providers for Your Small Business’ Retirement Planning Needs

Choosing an Institution for Your Individual 401k, SEP IRA, SIMPLE IRA, Defined Contribution Plan or Defined Benefit Plan

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Choose Among Providers for Your Individual 401k, SEP IRA, SIMPLE IRA, Defined Contribution Plan or Defined Benefit Plans
How To Choose a Plan Provider

Choosing a firm for your company retirement plan is a very important consideration. You are putting money for both your own and your employees’ future in their care. You want to be mindful of the viability of the company as well as their costs, services and types of investments that accompany your plan.

Here are tips to evaluate 401k providers and products.

Look for 401k or IRA Features that Enhance Affordability

Too many small business owners simply assume a 401k plan is unaffordable – and many products are indeed very expensive. However, because of the importance of retirement planning, it is in your interest (and the interest of your employees) to explore your options.

New 401k products have been designed in part to meet the cost objections of Small Business Owners. You may be surprised how affordable a plan can be.

Features that enhance affordability may include:

  • No proprietary investment options
  • Subsidization of servicing costs
  • Surrender charge reimbursement (except in New York)
  • Automatic annual pricing review

Choose a Retirement Plan Appropriate to Your Company’s Size

Most large companies offer a comprehensive range of employee benefits, including sophisticated retirement plans with seemingly unlimited options and service. Small businesses generally cannot offer 401k plans comparable to those at large companies.

The good news is that you don’t actually need the kind of all encompassing plan used by big firms. You simply need a good plan.

If you give your employees an opportunity to save for retirement in a solid, well-crafted plan, you’ll make a persuasive argument to remain with your company.

Seek Fiduciary Support

The Employee Retirement Income Security Act (ERISA) is a federal law enacted in 1974. It mandated that any 401k plan sponsor be required to assume a plan fiduciary role.

The ERISA guidelines and fiduciary role are designed to insure that any retirement plan be operated in participants’ best interests. This is a serious responsibility.

As a Small Business Owner, you need to make certain that the 401k product you choose provides adequate fiduciary support. This may include:

  • Funds management oversight with a well-defined due diligence process to select and monitor your plan’s fund lineup
  • A fiduciary services guarantee that assures the fund lineup satisfies ERISA Section 404(c) regulations
  • ERISA Section 404(c) support that includes Qualified Default Investment Alternatives, a sample Investment Policy Statement, and an annual plan review

Seek a Plan with Quality Investment Options and a Strong Education Platform

Employees greatly appreciate retirement saving plans. However, it is important to offer them a plan with choices, quality and support.

When choosing a plan, you may want to assess:

  • The quality of investment choices – what kind of ratings do they have and how have they performed historically.
  • The range of choices offered. You probably want to consider a 401k product that offers your employees a broad range of investment options from leading investment managers. Most financial planners would recommend that they be able to diversify among asset classes, investment styles, and portfolio managers to help them establish an effective, long-term asset allocation strategy.
  • The types of employees you have – their age, financial knowledge and risk tolerance -- and choose a plan with investment options and assistance that might best suit their needs.
  • Education and support: Choose a 401k product with an education platform that offers a holistic view of retirement. Education should encompass asset accumulation and the increasingly important distribution phase, helping employees save wisely during their working years and spend wisely in retirement. For employees who wish additional help, you may want to offer a plan that offers risk-based and target-date asset allocation models.
  • The fee structure and/or loads associated with the investment choices or funds offered in the plan.

Seek an Easy-to-Do-Business-With Approach

Setting up a retirement savings plan is not usually a one-time task. You and/or your employees will need to maintain a relationship with the people administering your plan.

As such, you will want to consider a 401k product that simplifies your role as a plan sponsor and offers ongoing support and service to your employees. Ask if the plan sponsor offers:

  • Enrollment and plan implementation assistance
  • A plan sponsor Web site
  • Regular plan sponsor communications
  • Integrated administrative services like quarterly statements and newsletters, a customer service center, and 24/7 account access online and toll-free voice response service.

Alow NewRetirement to Match You to a Prescreened Provider

NewRetirement can match you to a Small Business Retirement Planner who can meet these guidelines and provide the advice and insight you may need.

Get Matched with the Right Retirement Advisor for Your Small Business

Find the Best 401k, IRA and Other Products to Improve Your Tax Efficiency, Employee Rentension and More