Three Questions You Need to Ask Your 401(k) Provider
As a business owner, it’s your job to find the right 401(k) provider to fit your company’s needs. How do you start that process? Here are three questions to ask a prospective 401(k) provider.
How would this provider help your employees?
Will they be able to retire on time? Numerous employees don’t take advantage of their 401(k) options because they are not educated about them. Will this provider offer financial training so that employees are better prepared to manage their 401(k)s? Unfortunately, many employees lack the financial literacy to manage their own portfolios. Your 401(k) provider should be prepared to support them in this process.
Will the provider act as a trustee?
Business owners have a significant obligation with regard to 401(k)s. The trustee must make decisions about investments and ensure compliance with ERISA and IRS regulations. This is worth discussing with your prospective provider, as there may be an option for the provider to be a plan fiduciary.
How much will it cost?
You have to look closely for hidden costs, because employers can be shocked at the total figures. Be sure to take into consideration management rates and provider fees. Fortunately, the Department of Labor implemented new regulations in 2012 that require service providers to disclose all costs in detail for each plan. This should make it easier to compare prospective providers and what they offer.
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