401(K) Plans

Why Do Employers Adopts 401(k) Plans?

401(k) plans are more popular than ever. Both employees and employers can appreciate their benefits over traditional retirement plans. Since their inception in 1982, when the Internal Revenue Service launched a public policy to encourage Americans to save for their own retirement, 401(k) plans have become the centerpiece of most employee benefits programs.

Employers may have several reasons for adopting 401(k) Plans. Some reasons relate to human resource issues, such as attracting and retaining employees. Other reasons may include tax issues, such as the deduction employers may be entitled to take on the contributions they make to the plan. Employers may also want to assist their employees in securing a financial plan for retirement.

Considering a 401(k) Plan Provider

For employers, it can definitely be a challenge to provide desirable benefits. Company growth comes hand in hand with quality employees, who appreciate a great benefit package. Success is also reliant on being cost efficient. Unless you’re a large company with ample accounting and human resources, you’ll probably turn to an outside source to set up your plan. It helps to know what’s involved in set-up and what to look for in a provider.

• Cost of administration
• Range of investment choices
• Effective employee communication
• Flexibility to add/delete investment choices
• Service that meets all needs promptly and effectively
• Benefit statement sent to each employee
• Discrimination testing
• 24-hour, toll-free, daily valuation number for participants
• Quality name and reputation