How to Start a 401(k) for Employees

Setting up a company-sponsored 401(k) plan can give an employer an advantage in a competitive job market and benefit employees. We have developed this guide to help you learn how to set up a retirement plan for employees.

Our corporate retirement services at SD Mayer, through SDM Advisors, were established to support senior management through the design, maintenance and implementation of your organization’s retirement plan. Our goal is to ensure your plan is compliant with the Employee Retirement Income Security Act (ERISA) fiduciary standards. Additionally, we know how essential it is for employees to prepare for retirement, and develop custom education programs that are based on your organization’s unique characteristics.

Retirement plans are a necessity for any business that cares about its employees and wants to remain competitive in the job market. Offering a 401(k) shows your employees you care about them and their futures. You need an expert to optimize your plan and ensure it can deliver the most significant benefits to your team. SD Mayer can help you get started today.

Commonly Asked Questions About How to Provide a 401(k) to Employees

Designing and carrying out a retirement plan for your business is a complicated and time-consuming process. You want to spend your time focusing on your company’s greatest needs, such as product development, management and leadership. While creating a retirement plan is critical to attracting and maintaining the best talent, you simply don’t have the time to initiate or administer a 401(k).

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We have experience setting up retirement plans with offices in the San Francisco Bay Area and Silicon Valley

If you are considering setting up a 401(k) plan for your employees, you likely have several questions about the process, the costs and what this plan can offer your company and employees. Below we have included frequently asked questions we receive from business owners:

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Armus, a technology solution provider focused on healthcare quality in Silicon Valley, sought assistance finding a retirement plan that better suited their growing company.

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Frequently Asked Questions

1. How Do You Set up a 401(k) Plan for Employees?

Establishing a 401(k) plan involves doing research, making decisions based on the research and making selections that are right for your business:

1. Research your options: First, research the options for retirement plans for your employees. Research 401(k) management companies that provide administration and recordkeeping services for a 401(k) plan. Try to narrow your list of potential companies to those that can serve your company and employees over the long run with excellent customer services and extensive resources.

2. Ask for referrals: Next, ask for referrals from other business owners, particularly those with businesses similar to yours. A business owner who also uses a 401(k) management company can offer insights about their own experience selecting and working with a 401(k) plan service provider.

3. Choose a 401(k) plan: After choosing a retirement services provider, you can select a plan that best fits the needs of your business and employees.

Designing and carrying out a retirement plan for your business is a complicated and time-consuming process. You want to spend your time focusing on your company’s greatest needs, such as product development, management and leadership. While creating a retirement plan is critical to attracting and maintaining the best talent, you simply don’t have the time to initiate or administer a 401(k).

At SD Mayer, our services bridge the gap between your needs and your capabilities. We have experience setting up and nurturing retirement plans, with offices in the San Francisco Bay Area and Silicon Valley. Our flexibility and commitment to providing detailed information about our plans allow you to focus on what you do best without worrying about this component of your employees’ benefits package. When you pass this obligation on to us, you can enjoy peace of mind knowing we will work tirelessly on your behalf.

2. How Does a 401(k) Plan Work?

Options that may be available to your company include a traditional 401(k) plan, automatic enrollment 401(k) plan or a safe harbor 401(k) plan:

  • Traditional 401(k) plan: This is generally considered the 401(k) plan with the greatest flexibility. With this plan, you can make contributions for each of the plan's participants or match your employees' deferrals. You can also choose to do neither or both.
  • Automatic enrollment 401(k) plan: This 401(k) plan lets you automatically enroll your employees and set deductions from their salaries unless employees choose otherwise. With this plan, employees are encouraged to participate and increase their savings for retirement, which also benefits you as the business owner. This 401(k) plan may also include a safe harbor provision.
  • Safe harbor 401(k) plan: This 401(k) plan has several variants, and your company is required to make a contribution to the participants. Contributions offer benefits to the business owner, the company and the highly compensated employees, as they are given the ability to maximize their salary deferrals.

3. How Do Companies Benefit From a 401(k)?

While companies are not required to offer a 401(k) to employees, there are many benefits to doing so:

  • Give your company an advantage in a competitive market: Most employers provide 401(k)s to their employees, which means to stay competitive, you may want to offer a 401(k) plan as well. Many also offer a match on a portion of their employees' 401(k) contributions. With a 401(k) plan, you may be able to better attract and retain top talent.
  • Demonstrate your care for your employees: By offering your employees a 401(k), you are showing you care about their well-being. With a retirement plan, employees will likely feel more comfortable staying with your company for the foreseeable future.
  • Save money on taxes: Offering a 401(k) to your employees can help your company save money on taxes. You may be able to deduct your employer contribution to 401(k)s. If you are a small business owner, you may even qualify for a tax credit for the first few years, which is intended to help offset the expense of administrative fees. A 401(k) may offer tax savings to your employees as well.
  • Encourage employees to stay with your company: Employees may choose to leave an employer that does not offer a 401(k) for an employer that does.

In comparison to other retirement options, a 401(k) plan offers the widest range of benefits for employees and employers.

4. How Can a Small Business Offer a 401(k) Plan?

401(k) plans for small businesses require some setup. While some steps can be outsourced, you maintain a fiduciary duty in ensuring the 401(k) plan provides a benefit to the participants. The steps to offering a 401(k) plan as a small business include:

  • Creating a plan document: If you own a small business, you may want to start by creating a 401(k) plan document that details the plan and complies with the Internal Revenue Service (IRS). You may also want to set up procedures that make sure the plan document is adhered to.
  • Establishing a trust for the plan's assets: The assets of your 401(k) plan should be held in a trust. This ensures they are used only to benefit the plan's participants and beneficiaries.
  • Select a trustee: You may need to select a trustee who can handle the activities of the plan, including plan investments, contributions and distributions. Choosing a trustee is a critical decision, as this person's responsibilities and decisions will impact the financial integrity of the plan.
  • Providing participants with plan information: Participants should receive information periodically that keeps them updated on changes and investments. The plan's fees should be communicated to participants, and you may want to provide a disclosure form, as this can help make sure communication follows the requirements set by the IRS.
  • Maintaining records of contributions and values: Keep accurate records of current plan values and employee contributions. Many small businesses accomplish this by working with a 401(k) recordkeeper who can manage the setup of your plan and ongoing record management.

5. What Is the Cost to Set up a 401(k) Plan?

The costs associated with setting up a 401(k) plan will depend on the company's size, along with the kinds of benefits your business chooses to include. Along with the setup fees, you may need to pay costs associated with rolling over assets and maintaining the 401(k) plan.

If you choose SD Mayer, there are two ways by which we can receive payment for services. The first is by a fixed percentage of plan assets. The percentage tends to be anywhere between 0.25% and 0.75% of plan assets. The second option is a flat fee that typically fluctuates between $5,000 to $10,000. Both of these options resemble annual recurring income.

Services SD Mayer Offers

By choosing SD Mayer to take over or create your retirement plan, you can enjoy many advantages:

benefits of our corporate 401k retirement plan services

The Benefits of Our Corporate 401(k) Retirement Plan Services

The first is the benefit of our experience. We have assisted many businesses just like yours with their retirement services. We understand the critical elements of success in such a transition, and we apply what we have learned to your company. We know that offering protection for your plan is equally crucial to maximizing your long-term outcomes.

Our knowledge informs our decisions and recommendations for your business. SD Mayer draws on all available resources to create plans you can trust and rely on. Just a few ways we look out for you include:

  • Education: We help you and your employees understand how the money saved under our plan can grow.
  • Third-party administration: You don’t have to worry about tending to your retirement plan internally.
  • Compliance: We are versed in regulations and guidelines for retirement plans and can ensure yours meets every stipulation.

Administering your retirement plan should be at the bottom of your to-do list. You have more pressing matters that deserve your immediate attention. SD Mayer allows you to concentrate on those tasks while we look out for your team’s future financial health.

Why SD Mayer

At SD Mayer, we are transforming customer service in the accounting industry. We focus on utilizing technology and an innovative way of thinking in each of our client interactions. We are the trusted advisor of our business clients, offering actionable insights that solve business issues and help you strategize for future growth.

We can help individuals reach financial security through retirement planning, investment guidance, estate planning and insurance and tax planning. Whatever stage you or your business are at, we can support you as your trusted advisor.

contact SD Mayer for business retirement plan consulting

Contact SD Mayer for Business Retirement Plan Consulting

The benefits you offer your employees reflect the values of your company. Give them the best possible plan to save for retirement by partnering with a corporate retirement advisor that understands the markets and wants to help you in the long term. We put extensive thought and care into every interaction to ensure you and your employees are ready for tomorrow.

We are located in the San Francisco Bay Area and Silicon Valley, and we service clients in other locations virtually. Looking out for your employees by starting or updating a retirement plan can benefit your company for many years to come. Ready to learn more about our corporate retirement services? Contact us today to schedule a consultation.

Securities and Advisory Disclosure:
Securities offered through ValMark Securities, Inc. Member FINRA, SIPC. Fee-based planning offered through SDM Advisors, LLC. Third-party money management offered through ValMark Advisors, Inc., an SEC-registered investment advisor. 130 Springside Drive, Suite 300, Akron, Ohio 44333-2431. 1-800-765-5201. SDM Advisors, LLC is a separate entity from ValMark Securities Inc. and ValMark Advisers, Inc.

Thought Leadership

Our Retirement Services Team

M. Thérèse Hjelm
Director, Wealth Management
Cody Martin
Advisor, Wealth Management
Daniel P. Rush
Vice President, Wealth Management
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