10 Things to Consider when choosing a company 401(k) plan

1. The plan's fees and expenses: It's important to understand the costs associated with the plan, including any fees charged to employees and any expenses that the company will need to pay. Higher fees can eat into employees' retirement savings, so it's important to find a plan with competitive fees. One big pricing tactic some companies used in 2022 was to show a lower monthly fee for annual administration to look cheaper, when the real cost was in the “per participant” fee each month. The Ryding Company (TRCO) keeps the per participant fee lower than competitors so that companies are gouged for growing.

2. The plan's investment options: The plan should offer a range of investment options that will allow employees to diversify their retirement savings and potentially earn higher returns. Knowing which option works best for a company’s unique situation is difficult. A team like TRCO’s can educate you on the best options.

3. The plan's administrative support: The plan provider should offer support to help with enrolling employees and managing the plan, as well as any compliance issues that may arise. This is where a TPA like TRCO is  the most valuable.

4. The plan's vesting schedule: The vesting schedule determines how long employees must work for the company before they are entitled to their employer's contributions to their 401(k) account. A shorter vesting schedule can help to retain employees, but a longer vesting schedule can provide the company with a cost-savings.

5. The plan's contribution limits: It's important to understand the maximum amount that employees and employers can contribute to the plan each year. This can help ensure that the plan meets the company's goals for retirement savings and complies with legal requirements.

6. The plan's employer matching contributions: Many 401(k) plans offer employer matching contributions, where the company will match a portion of the employees' contributions to the plan. This can be a powerful incentive for employees to save for retirement, so it's important to consider whether the plan offers employer matching and, if so, how generous the match is.

7. The plan's recordkeeping and reporting: The plan provider should offer clear and transparent recordkeeping and reporting to help employees monitor their retirement savings and ensure that the plan is being managed properly.

8. The plan's portability: Employees may want to take their retirement savings with them if they leave the company, so it's important to consider whether the plan offers this option and, if so, how easy it is for employees to transfer their savings to another plan.

9. The plan's rollover options: Employees may also have retirement savings in other plans, such as a 401(k) from a previous employer. It's important to consider whether the plan allows employees to roll over these savings into the company's 401(k) plan.

10. The plan's customer service: It's important to choose a plan with high service levels and, ideally, experts who are responsive and available. This may be one of the most important things a TPA will provide. The retirement plan landscape is more complex than ever before and you’ll want a real person to talk to when things get difficult.

Companies should work with financial advisors and TPAs for the best value

The right 401(k) plan for you will depend on your individual financial situation and goals. It's important to carefully consider your options and choose a plan that offers the features and investment options that are most suitable for your needs. Consult with a financial advisor and a TPA who can provide guidance and advice on choosing the right 401(k) plan.

Reach out to our team and we’ll help you and your clients understand what their options are for an exceptional 401(k) plan!

This information is provided as general guidance and may be affected by changes in law or regulation. It is not intended as accounting or legal advice. If you have questions please reach out to our team.