One of the challenges a small business owner faces is finding the right retirement plan. While some may feel a 401(k) is too cumbersome, there are reasons why a 401(k) is often the best option, even if your business is very small. However, before deciding on the right plan, it is crucial to carefully evaluate plans as well as the current, and future impact on your business.

Factors to Consider When Selecting a Plan

One of the first factors is the size of the company. A sole proprietor and a company with employees may require different types of retirement plans, although both may opt for a 401(k) plan. Here are some of the issues to be considered when considering a plan:

  • Size of Business – while a sole proprietor may wish to consider a different plan, one reason to consider a 401(k) is to account for future growth. Having an existing 401(k) plan in place means you have a valuable recruiting tool when you start expanding your staff.
  • Ease of Enrollment – thanks to lesser rules which apply to small businesses, a 401(k) plan can have provisions to automatically enroll new employees. This means less administrative burden on your company and less concern about compliance matters.
  • Flexibility of Investments – one of the most important factors to be considered is the breadth of investment options. This is particularly true if you have employees in different age groups. A younger employee may be willing to take more significant risks with their 401(k) investments while an older employee may prefer a more stable investment. This is important to determine ahead of time, particularly since a company who has a lower retention problem will likely need a broad base of investment options.
  • Administrative Burden – the last thing a small business owner needs is additional paperwork. When searching for a plan, it is important to determine ahead of time the amount of time you will be required to dedicate to dealing with plan paperwork. Having the right company working on your 401(k) plan will ensure the burden of administering the plan will be handled by the outside company.
  • Fees Involved in Plan – a big factor in determining the suitability of a 401(k) plan for your small business is the fees for the plan. While the IRS allows most small businesses to deduct a portion of the fees for the initial setup, there are ongoing management fees which must be considered.

Working with the Right 401(k) Administrator

Once a business owner, or manager has an opportunity to carefully evaluate their options for a 401(k) plan, they must find the right administrator for the plan. This means thoroughly reviewing their qualifications, the level of service they are providing, and the quality of the plans offered.

In addition to offering customized solution to your plan needs, the right plan administrator should also be addressing the required paperwork. These filings are required under ERISA Title I and Title IV as well as the Internal Revenue Service (IRS).

Another factor when considering a small business 401(k) plan is the administrator's experience in dealing with small business plans. While many plan administrators are well-versed in dealing with plans for a large company, many do not have the experience to deal with small business 401(k) plans.

When you need a customized retirement plan solution for your business, consider the benefits of working with Life, Inc. Retirement Services. We bring a unique perspective because our focus is on small business needs. Your need a plan administrator who will work with you to customize a 401(k) plan that fits your needs and meets your company objectives. Contact us today at 614-396-7652 or by Email at for a free consultation and let us help you design the right 401(k) plan for your business.