Implementing a 401(k) plan for your employees is good business. It means you’re thinking strategically, that you care for your employees, and are focused on the long-term health of your company. Implementing a retirement plan:

• Can help you attract and retain top talent.
• May make you eligible for tax credits.¹
• Can allow you to deduct contributions to employee 401(k)s as business expenses.
• Helps ensure that your employees are preparing themselves for their future well-being.

In short, there are many good reasons to implement a 401(k) plan, and hundreds (if not thousands) of providers eager to help you do so. Choosing among those providers can be a bit bewildering, so we’ve put together a preliminary checklist to help you get started. Of course, your business and its needs are as unique as your employees, so customize this list and prioritize it however suits you best.

Starting Checklist for Evaluating 401(k) Providers

1. Assess (and rank) the reputation of the providers you’re considering. Read client reviews and see if the Better Business Bureau has anything to say about them.
2. Ask the providers you’re considering to define their corporate structure and certifications. Are they an investment broker? An insurance agency? Do they employ Registered Investment Advisors who have a legal obligation to put the interests of you and your employees first?
3. Most solutions are powered by larger platforms – recordkeepers, plan administrators, investment managers, financial professionals, etc. Know who they are and the role(s) they will play. Are they well known? Respected? Leaders in their industry?
4. Determine what fiduciary role the provider will assume in the relationship and what protection from fiduciary liability they offer.
5. Ask for references who will share their experience with the provider. Rank providers on ease of implementation and administration.
6. Ask for an apples-to-apples cost to your business based on the size of your employee/participant base.
7. Review the investment options that will be available to your employees and their relative costs.
8. Nail down the specifics of administration responsibilities. The IRS provides its own handy checklist for defining key service agreement elements with plan providers.²
9. Ask for a demonstration of both the interface you’ll use to interact with the provider, and what your employees will use to access their 401(k). Rate them on how intuitive and easy to use they are.
10. Add more items to this checklist based on what you learn from the preceding line items and what emerges as most important for your business and your employees.

You’ve got this!

The road to implementing a 401(k) plan for your employees may get a little rocky at times, so put the work squarely on the providers – they should be eager to earn your business – and keep yourself firmly in the driver’s seat. Given that nearly half of U.S. families currently have no retirement savings,³ what you’re trying to do for your business, your employees, and their families is both important and well worth the effort. Lead on!

Important Disclosures:

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Content in this material is for general information only and not intended to provide specific advice or recommendations.

LPL Tracking #1-05164767

¹ https://www.irs.gov/retirement-plans/retirement-plans-startup-costs-tax-credit

² https://www.irs.gov/pub/irs-pdf/p3998.pdf

³ https://www.epi.org/press/nearly-half-of-u-s-families-have-no-retirement-savings-policymakers-should-expand-social-security-to-meet-21st-century-retirement-needs/