7 Tips for Finding The Best 401k Partner For Your Business

7 Tips for Finding The Best 401k Partner For Your Business

Retirement is an important perk for modern employees. With uncertain futures and a shrinking talent pool, it’s important for employers of all sizes to offer a retirement option if they can.

Larger companies have the resources to thoroughly address the retirement question. Smaller businesses, though, tend to struggle in that area.

The good news is that there are many third-party providers that small businesses can partner with to set up a 401k option for their employees. If you own or manage a small business, here are some of the biggest considerations when it comes to finding the best retirement plan partner for your company.

1. Get Professional Help

Often the “get professional help” tip comes at the end. But the truth is, retirement plans aren’t simple, and you don’t want to have to go to a professional partway through the process.

Instead, consider finding a financial professional to help guide you through the process right from the get-go. Make sure to find someone outside of the process who can offer a neutral, third-party opinion.

Having a knowledgeable individual that you can trust by your side can be a huge benefit. They can help you navigate through the various questions and choices that you’ll have to make, both when setting up and managing your plan over time.

2. Assess Your Needs

Next up, consider the needs of your company. You want to choose a small business 401k plan that meets your business’s goals — and there are a lot of options out there.

When you go to choose a partner, make sure to dive into what type of plans they offer that will best suit your needs. Make sure they have the tech you need to support your business, and look into what kind of customer support they offer. All of which will help make your life as a small business easier and more efficient.

3. Consider the Costs

There are many different costs associated with business retirement plans.

First and foremost, there’s the question of matching contributions. It’s usually recommended to do this to some degree. This improves the benefit for your employees, shows that you’re vested in their future, and gives you something to write off as an expense.

Beyond matching, there are also numerous fees to consider. It’s no secret that 401ks aren’t free. On the contrary, there are often fees associated with various activities, from recordkeeping to transactions and investments. These often scale with a company, as well.

Even with all of these financial considerations, small businesses should be able to expect lower, more manageable investment fees than larger corporations. In addition, the SECURE Act may provide certain financial incentives that can offset some of your retirement costs.

When it comes to choosing a provider, in particular, make sure you do your homework. Get multiple quotes from different partners, and ensure that you get a good price.

4. Review if the Partner’s Services Are Bundled

The world is built on third-party transactions. As technology has advanced, the ability to outsource activities to other entities has only become easier. In fact, the very act of working with a partner to set up your business’s 401k option is an example of outsourcing in action.

The thing is, your partner may turn around and outsource certain aspects of managing your account to others, as well. These are called third-party administrator (TPA) activities. Some 401k partners bundle these TPA activities together while others have you work with outside TPAs yourself.

Both of these have advantages, and it’s important that you inquire how things will be handled with each provider that you might work with. If you have a financial advisor to lean on, run things by them, as well, to see which option is best for your particular situation.

5. Check How Much Personalization They Offer

Personalization is part and parcel of the modern world. The more you can personalize a product or service, the better. And that doesn’t just go for your customers. It also impacts your employees.

When you consider different 401k partners, ask them what kind of personalization options they offer. Chances are they won’t just offer a cookie-cutter formula at this point, but the degree of personalization is still worth investigating.

How much can they tailor each plan to the specific needs of employees? Do they offer this advice themselves or is it something that is outsourced to a third-party advisor? What kind of personalization options do you think your employees will be looking for in the first place? These are all worth asking before you commit.

6. Vet the Partner’s Investment Options

Another nitty-gritty aspect of the 401k partner hunt is digging into what kind of investment options they offer. You don’t want to find someone who is affordable but also restricts your employees’ ability to build diverse portfolios.

A good partner should offer a variety of investment choices, such as:

  • Options in both emerging and international markets;
  • Both large and small stocks;
  • Multiple bond options.

This goes hand in hand with the personalization question. Is a partner set up to offer what your team needs for their retirement activity? Or are they going to offer a restricted setup that stifles your employees’ attempts to prepare for the future?

7. Consider Integration and Usability

On the business side of things, integration is another key logistical factor that you want to consider. Being able to integrate your 401k service with payroll is a big deal. It can save you time and keep things streamlined.

Make sure that the service that you choose doesn’t just integrate with your current payroll provider, either. Also, review the suite of integration tools that each provider offers. Are you comfortable with the options available just in case you need to use them to integrate into a different payroll system in the future?

Usability is another important employee-facing factor. You don’t want to set up a stellar plan, just to have your staff avoid it because it’s too complicated.

Remember, this is a perk that you want to attract employees, not deter them. Make sure to choose a provider with a competent retirement option that is easy to set up and manage.

Choosing a 401k partner can feel overwhelming. But if you go about the process in the right way, you can make the best choice for your business.

Start by finding a professional financial advisor that can serve as your counselor and ally throughout the process. Then break down your company’s needs as well as the expectations of your employees. Once you’ve done that, you can choose a plan that works best for you.