We Answer Your Most Frequently Asked Questions.

Whether you’re shopping for a new 401(k) plan or looking to upgrade your current plan, the options and information can seem overwhelming. Below we breakdown our most frequently asked questions. 

Why should we have a small-business retirement plan?

There are several compelling reasons to providing retirement plans:

Investing for the future: As of April, 2019, the average personal savings rate for Americans is a low 6.2% A quality retirement plan not only helps secure your future—it has shown to be the primary way employees secure theirs.

Recruit and retain key employees: Today’s job market is at a low 3.7% unemployment rate as of March, 2019. Offering a quality 401(k) plan helps make your business more competitive when attracting and retaining quality employees.

Tax Benefits: There are potential tax benefits to offering a 401(k) plan since plan contributions are deductible for the business owner as a business expense. 

Is my business too small to offer a 401(k) plan?

We hear this question often. The truth is, businesses of all sizes – even owner-only businesses – can offer a 401(k) plan.  

Is it mandatory for an employer to match our employee’s 401(k) contributions?

No, it is not mandatory for an employer to match their employee’s contributions. 

What are some of the differences in 401(k) plans?

There are several types of 401(k) retirement plans to choose from, each with distinct conditions.

Traditional 401(k): With a traditional 401(k) plan, employers can choose not to contribute, make outright contributions, or match an employees’ contributions. Employers can also set a vesting period for contributions. Regardless of the selected option, traditional 401(k) plans must successfully pass annual nondiscrimination testing.

Roth 401(k): A Roth 401(k) plan is an employer-sponsored investment savings account that is funded with after-tax dollars up to the plan’s contribution limit. This type of investment account is well-suited to people who think they will be in a higher tax bracket in retirement than they are now. The traditional 401(k) plan is funded with pretax money, which results in a tax on future withdrawals

Safe Harbor Provisions: Safe Harbor 401(k) provisions, although similar to a traditional, require employers to make contributions. It has specific rules about the structure of contributions, which must be vested immediately. Since contributions are required, companies can bypass nondiscrimination testing. Check out our recent blog on Safe Harbor Provisions to learn if this 401(k) option may be right for your company. 

SIMPLE 401(k): SIMPLE 401(k) plans are beneficial to businesses with fewer than 100 employees. Similar to Safe Harbor Provisions, employers are obligated to make contributions to their participants’ 401(k) accounts which are vested immediately and they are exempt from nondiscrimination testing. To learn more, visit our recent blog on SIMPLE 401(k) plans and your business

What is a 401(k) plan fiduciary?

Your 401(k) plan fiduciary assumes discretionary authority or control over the administration of the plan and exercises authority or control over the management or disposition of plan assets. He or she may render investment advice and takes responsibility to keep your company in compliance. 

What is ERISA?

ERISA is an acronym for the Employee Retirement Income Security Act, a federal law that established legal guidelines for the administration of and investment practices within defined benefit and defined contribution plans.

Settling on the right plan for your company can be confusing. At RWA Advisors, we work closely with you to ensure that your employees receive top-notch education and care during onboarding and throughout the enrollment year. For more information on 401(k)s plans for your business, contact us at (561) 288-1111.