Setting up a small business 401k plan can be an extremely wise investment for the financial security of your employees. Not only does a small business 401k promote a financially stable retirement for all of your employees, but it will also keep valuable employees around and attract other talented personnel as well. In addition, any money that is contributed to the small business 401k may grow a great deal through various stocks, mutual funds, and other smart investments.
Getting Your Small Business 401k Started
To begin setting up a 401k plan for your employees you will initially need to decide whether to do it yourself or use a professional to uphold the plan. Since retirement plans are a very specialized field, it is advised to seek professional help. However, if you plan to do it yourself, here is a list for the initial set up of the small business 401k.
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- Choose a type of 401k plan – This is the first step to setting up a small business 401k plan for your employees. Three types of plans are available including the traditional, safe harbor, or SIMPLE plan. Make sure to research each one extensively, and choose according to what would be best suited for your business.
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- The Written Plan – After you’ve chosen the type of small business 401k for your company, you must build a written plan that will dictate the daily operations of the 401k. Often a professional will provide this plan. You are bound to the conditions of the document after it has been written and implemented.
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- Accounting/Recording Keeping – When you’ve implemented your 401k, you will then need some sort of accounting or recording-keeping software to properly keep track of any earnings, losses, investments, and any other financial issues that have to do with the small business 401k.
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- Tell Your Employees – Finally, you will need to tell your eligible employees about the plan in a summed-up version of the entire small business 401k. Provide them with what type of plan it is, and what the benefits are of participating.