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How to Set up a 401(k)

Posted on 05 March 2008 by Proldan

Looking to establish a retirement plan for your company? There are several options to consider such as a 401(k), Safe Harbor 401(k), Profit Sharing Plan, Simplified Employee Pension (SEP), Simple IRA and 403(b). The most popular type of qualified retirement plans is the 401(k).

Steps

Have a clear understanding for why you want to establish a 401(k). For example, some companies want to attract or retain good employees, while others want to ensure there is a succession plan in place for the older workforce.
Define the needs of your organization and its employees as it relates to retirement benefits. Conduct a simple survey to determine potential plan participation.
Determine whether the company is planning to match contributions or not.
Create a census with critical employee information such as full name, employment status (part-time or full-time), hourly wage or salary, level of employment (entry level, management, etc.), and the date of hire.
Determine a vesting schedule for when employees can participate.
Choose a 401(k) advisor well. Do your due diligences by interviewing and receiving a proposal from at least 3 different 401(k) providers. And, ask lots of questions.

Tips

Make sure you clearly understand how your financial advisor and recordkeeper are being compensated.(Commission or Fees)
Understand how investment options are chosen and managed by the investment advisor.
Ask for historical returns for the different allocation models. There should be approx. 5-8 models to choose from (For example: Very Conservative - Very Aggressive). For mutual funds, request fund ratings and report.
Understand how and when financial statements are provided to the plan administrator and employees who participate.
There are 3 basic platforms to structure a 401k: 1) Annuity, 2) Mutual Fund, and 3) Trust. Learn the pros and cons of each one as the mechanics are different and the most suitable one depends on several factors including costs and convenience.
There are open architecture and closed architecture bundled products. Open architecture are more open to varying styles of investment choices and vehicles (ie stocks and ETFs) This can be beneficial for the more sophisticated investor.

Warnings

Watch for hidden fees and high commission or fee structure. (recommended: 1% or below depending on plan size)
Your plan administrator (TPA) and investment advisor should not be the same entity. This creates a conflict of interest. In this case, the recordkeeper and compliance provider are also doing the investing.
The biggest names are not necessarily the best providers.

Sources and Citations

Article provided by wikiHow, a collaborative writing project to build the world’s largest, highest quality how-to manual. Please edit this article and find author credits at the original wikiHow article on How to Set up a 401(k). All content on wikiHow can be shared under a Creative Commons license.

For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436
advisors@allgenfinancial.com

www.allgenfinancial.com

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Tags: 401k, business planning, online retirement system, plan adminstration, retirement benefits, Retirement Investing, retirement investments, retirement plans, small businesses, TPA

401(k) Retirement Benefits for Small Businesses

Posted on 06 July 2007 by Proldan

Allgen Finnacial Services, Inc. just launched a program that will allow small and medium size businesses the ability to cost effectively establish a 401(k) using a fully integrated online system which will allow businesses to signing-up, administer, and monitor their retirement benefits with great ease.

How we work with our small business clients
Allgen Financial Services, Inc. provides superior investment solutions to 401k participants. As an independent Registered Investment Advisor (RIA), we implement 401(k) plans using low-cost mutual funds to build diversified portfolios. Along with
Nobel Laureates and leading academics, we believe the best way to grow your retirement investments is through a fully diversified global portfolio.

For 401(k) participants, we provide five model investment portfolios. This takes away the guesswork (and wasted time) by employees trying to pick individual mutual funds, and will help them have a better investment experience. Our five portfolios give a full array of choices, from aggressive to conservative - and everything in between. Importantly, because our portfolios are fully diversified (over 10,000 securities) in low-cost mutual funds, you avoid employee liability problems associated with a lack of diversification or high expenses.

Services and support you can expect
Allgen will help establish and customize an appropriate 401(k) plan for your business and will ensure that this is communicated properly to participants. Allgen will also provide ongoing plan review services and participant education.

How we get compensated for our services
It should come as a surprise that how your financial advisor is paid may determine the content of the advice you receive. Most financial advisors sell financial products. As such, they are paid commission by the Wall Street companies whose products they sell.

Allgen Financial Services, Inc. is a fee-based investment manager. We are paid by our clients for providing investment advice, not by Wall Street companies for selling their products. As an independent company we have no conflicts of interest, nor do we earn commissions on your transactions. There are no sales loads or commissions paid in Allgen’s 401(k) plans. Allgen is paid an asset management fee equal to a percentage of assets under management for the entire 401(k) plan.

More information about setting-up a 401(k) for your company

For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436
advisors@allgenfinancial.com
www.allgenfinancial.com