401k Plans – The Key to a Safe and Secure Retirement

By: Life, Inc.
 
 
Life Inc Retirement
Life Inc Retirement
COLUMBUS, Ohio - Aug. 2, 2017 - PRLog -- One of the greatest ways to ensure a safe and secure retirement for you and your employees is a 401(k) plan. This is a great way to save money because it automatically takes a portion of your paycheck and saves it for future use, along with offering tax advantages and tax strategies for business owners. At a high level, a 401(k) plan is a benefit sponsored by a business which enables the owner(s) and employees to defer their paycheck into a 401(k) account, offering the ability to invest in your future. You can defer these funds pre-tax, which remains tax-free until the money is withdrawn, or can be made as a ROTH contribution which is taxed up front, then grows tax-free with no additional taxes when you retire.

While there are several types of retirement plans, 401(k) plans are the most recognized and flexible qualified plans available. This means that the plans are looked over and maintained as per the regulations mentioned in the Employee Retirement Income Security Act of 1974 as well as IRS tax code. Even though they are a way to save for the future, care must be taken while choosing plan design, set-up and features available as all plans and programs are not created equal, and some might end up doing more harm than good. In order to select the best 401k plan services, we have included some key points which you need to consider when setting your company up for success:

Diversification is Key to Long Term Retirement Planning - In order to have a successful retirement plan for you and your employees, it needs to be well diversified. One of the main ways to achieve diversification is by offering a broad range of mutual funds, which can include Bond funds, Large-Cap, Mid-Cap, Small-Cap, International, and can also include Emerging Markets and Real Estate. Or, you can offer funds that do all this for you in the form of asset allocations funds, with most companies offering target date funds since they offer time-based risk profiles, and employees don't have to make changes as they near retirement since the fund does it for them.

Time is Not on Your Side! – When retirement planning (http://www.lifeincrs.com/retirement-planning), it is essential to start contributing towards a retirement plan at a very early stage in your career. The contributions you make should also be made at a reasonable level to have sufficient funds saved up for retirement. A great way to help you manage this and to help your employees achieve this is by offering automatic enrollment, which has options like opt-out as well as stepped up contributions. Most employees like these features since many are fearful of saving for retirement because they don't understand how to save for retirement but trust their company to do it for them. The ones that don't can simply opt-out of the plan.

Have Someone Do It for you or choose a Fund that Will – In general, most 401k Plans used by employees end up underperforming other market returns. This is due to many employees having short sighted goals, and zigging when they should have zagged. What does this mean? Many employees will buy high and sell low, chasing returns instead of following a long-term investment strategy. While there are a few approaches to fixing this, offering employee education, meetings with the plan advisor, or offering age-based asset allocation funds can all help employees invest for the long term instead of chasing their tails when saving for retirement.

Make it Easy for Your Employees – While this may seem like basic advice in the digital age we live in, I frequently meet with companies that offer very little information for their employees and their accounts, including some plans having no online access at all. At the very basic level, employees should be able to log-on to see their accounts, make changes to investments, and perform basic research. As you would expect though, most providers offer this and can also help employees make investment recommendations, project retirement income that includes other accounts and social security, along with requesting distributions, loans, and other transactions. While these advanced features may not seem like a lot, engaging your staff to plan for retirement in terms they understand, like future income in retirement, can lead companies to see 80%+ enrollment in their plans.

401(k) plans are the second most sought after benefit by employees, and by helping your employees have a safe and secure retirement you may also be helping your company's bottom line.  Financial stress is one of the leading drains on worker productivity, so companies that offer 401(k) plans and engage employees in them can see increased productivity, less sick days are taken and lower healthcare costs! So whatever your reasons may be for starting a 401(k) plan, retirement goals may not be the only thing you impact in your company!

Contact Info:

100 E. Campus View Boulevard Suite #250

Columbus, OH

USA
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Source:Life, Inc.
Email:***@lifeincrs.com
Tags:Retirement Planning, 401k Plan
Industry:Financial
Location:Columbus - Ohio - United States
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