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Making 401(k) Plans Available to Businesses of All Sizes

October 05, 2014

At a time when businesses continue to eliminate pension plans and the future of Social Security is uncertain, employer sponsored retirement plans such as 401(k) plans are an important part of retirement for millions of Americans. 401(k) plans can be an effective tool in promoting financial security in retirement and a valuable option for businesses considering a retirement plan for their employees.

The first 401(k) plans were provided by employers in 1979, after the IRS implemented The Revenue Act of 1978.      401(k) plans are named after the section of The Revenue Act under which employees are not taxed on the portion of income they elect to defer, instead of receiving the income as immediate compensation (Employee Benefit Research Institute). 401(k) plans are the most flexible type of retirement plan, allowing employers to contribute to the plan on behalf of employees.

Below, we’ve outlined a number of reasons businesses of all sizes should offer their employees a 401(k) plan as part of their benefits package.

A Good 401(k) Plan Matters When Recruiting and Retaining Talented Employees. Many companies now provide a contribution or some type of match to an employee’s individual 401(k) contribution. Companies that put an emphasis on providing a good benefits package for their employees have added strength to attract and retain high caliber staff. Take care of your employees and your workforce will take care of you.

Implementing a 401(k) plan is not cost prohibitive. Many small-business owners consider cost to be a major deterrent to offering a 401(k). However, there are a number of plans that cost as little as a monthly telecommunications bill. 401(k) plans also offer employers tax advantages ranging from tax credits and deductions for their business to protecting more of their individual hard earned money from taxes in their own personal retirement account. 

A 401(k) plan will help prepare for your retirement and the retirement of your valued employees. If you are an owner or employee of a company that sponsors a 401(k) plan, you are eligible to participate, thereby making the 401(k) tax-deferred plan an effective way to help manage and pursue a financially secure retirement for both owner and employees.

Employers that plan to implement a 401(k) plan have much to consider. Before implementing, make sure you can answer the following questions and understand how your decisions affect the plan.

What type of plan should be implemented? There are a variety of 401(k) plans to choose from. Know the general types of 401(k) plans available to alleviate uncertainty and to help you select the plan that is appropriate for your business.

Should you offer a matching contribution?If so, how much should you contribute? While employers are not obligated to contribute to their employee’s retirement accounts, they can include a company match as part of a benefits package.

Who will act as the plan administrator? It is important for employers to appoint a plan administrator that will engage with employees and organize educational materials through seminars, newsletters and statements.

Manhattan Ridge Advisors Corporate Retirement Planning

Manhattan Ridge Advisors understands that the success of a 401(k) plan is dependent upon more than just a traditional suite of advisory services. We always design our 401(k) plans to help meet the specific needs of our clients. By reviewing the design and operational features of their retirement plan from an unbiased perspective, we find the appropriate plan to help meet our clients’ corporate goals and objectives, as well as the needs of their employees.

Our team is committed to providing employers with solutions and education to assist them in meeting their fiduciary obligations. Our advisors are available to assist employers with implementing policies and procedures to mitigate employer liability while keeping plan participants educated through meetings and seminars.  

Manhattan Ridge Advisors “One Portfolio” account portal provides a constant resource for clients to view their comprehensive financial picture and offers support for employees to achieve more successful retirement outcomes.  Our method focuses on alternative investments and typically contains no stock picks. Automatic enrollment is also available.

Let Manhattan Ridge Advisors assist you in developing the right programs to recruit, reward and retain your most valuable employees while securing their retirement and yours. For more information visit our website or contact us at 212.370.1111.