With small businesses across the country contracting or expanding in sync with the challenges and opportunities at hand, retirement plan sponsors are encouraged to customize the plan to meet current needs. Experts provide examples of the flexible options you might seek.
Yes, you can have a retirement plan that shifts as the needs of your company shift. Trying to recruit and retain great employees? Needing to curtail expenses? Make sure your service providers, such as financial advisors, are giving you a full range of possibilities. Benefits Pro provides these examples:
- Matching: Many matching formulas are based on a discretionary employer contribution and, if needed, can be temporarily or permanently discontinued without rewriting the plan documents. …you might consider a match structure of 50% of the first 8% of the amount your employees contribute.… This encourages employees to save more, yet the employer commitment is just 4% of your employees’ aggregate contributions.
- Profit-sharing:This allows your employees to share in the successes of the company, while giving owners flexibility in how much they contribute since it is discretionary and can be changed each year.
- Safe harbor matching:Safe harbor plans are exempt from nondiscrimination testing requirements, an appealing proposition for many small businesses. While a safe harbor plan requires a defined company contribution and immediate vesting, it can help you avoid penalties and costs associated with testing….
- Vesting:Selecting the right vesting schedule can help with employee retention or encourage participants to dive right into saving.
- Auto-enroll and auto-increase: This has become a popular way to encourage saving….Why? Because while many employees neglect to enroll in their benefits, it’s often due to lack of education or understanding…. Yet when employees are auto-enrolled, they often fail to notice the small post-tax deduction despite the large impact it can have on their future. Consider starting auto-enroll at an amount that won’t have a significant impact on your team’s take-home pay….
Managing Daily Risks?
No matter what design options and services you choose, remember that as a fiduciary, you take on the every day risks associated with the duty of care expected under ERISA law. As ERISA regulations expand, it is important to protect yourself from personal exposure for a breach in your fiduciary obligations. Even defending yourself from an allegation could be ruinous: the cost of securing guidance from an expert ERISA attorney averages about $600—per hour. Why not obtain Colonial Surety’s affordable fiduciary liability insurance? Then you will be covered for defense costs and penalty limits up to $1,000,000. With an annual premium that is less than one hour with an expert attorney, you will get peace of mind your personal assets are protected from a breach of responsibility in the administration or handling of the employee retirement plan. At Colonial, it is so quick, easy and affordable to obtain coverage, you can do it right now: Fiduciary Liability for Plan Sponsors Here.
Remember: Tax Advantages
Yes! Your company retirement plan can help you offset your business taxes. Here are a few reminders from experts: A 401(k) also helps offset your business’ taxes, as it allows you to deduct applicable employee and employer matching contributions. Plus, the recently passed SECURE Act adds additional tax incentives for starting a new 401(k) plan and/or adding the auto-enroll feature (up to $16,500 in tax credits over the next three years). Therefore, a plan might cost less than you think.
Too much to do on your list? You are not alone. In fact, it’s common for plan sponsors to forget essentials, like renewing the ERISA fidelity bond which is required by the Department of Labor to protect the assets of the retirement plan from theft. Don’t risk the consequences—including personal liability for losses. Let leading national ERISA bond provider Colonial Surety Company help you ensure compliance. Uniquely, Colonial includes retroactive ERISA fidelity bond coverage for years when the plan was not covered. Additionally, you can opt for cost-saving multi-year coverage and ensure your ERISA bond remains Department of Labor compliant for the life of its term.
Keep in mind: the required ERISA bond protects the assets of the retirement plan from theft; Fiduciary Liability coverage protects you and your assets from personal liability; and Cyber Liability coverage can safeguard your company and plan from covered losses and expenses in the event of a cyber breach. With Colonial, you can easily and quickly secure your affordable coverage package today. Take a few minutes and do it now: Complete ERISA Bond Package.
Serving customers since 1930, Colonial Surety is the trusted source for the pension industry to secure legally required ERISA bonds, fiduciary liability insurance and cyber-liability insurance. We help safeguard plan sponsors, pension professionals and financial advisors – and keep their businesses compliant – with pain-free, efficient, and friendly service every time.
Colonial Surety Company is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the country.