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Before you reach out to a 401k plan provider, you need to know what the actual plan entails.
A 401k plan is a retirement savings account that bears a tax advantage, meaning that they are either exempt or deferred from taxation. Employees are given the opportunity to invest a portion of their salaries into long-term investments through automatic payroll withholding. The employer of the 401k plan may match the employee’s contribution up to a limit.
A 401k is eligible for special tax benefits under IRS guidelines since it is technically a “qualified” retirement plan. Qualified plans are available in two versions—pension plans or defined-contribution. The traditional 401k plan is a defined-contribution plan.
Defined-contribution plans determine the available balance in the 401k account by evaluating the contributions made to the plan and how they perform. Therefore, employees must make contributions to their 401k plan in order to gain value. The employer has the option to match some portion of that contribution, or not. After retirement, employees are granted the account balance.
Many employers might not offer the Roth 401k, but it is becoming an increasingly popular option. Unlike a traditional 401k, employees make contributions to this retirement plan after taxes are already taken out. This allows the account holder to withdraw their account balance after retirement without being taxed any further. A Roth 401k is more commonly attractive to millennials than older generations.
As an employer, you can match the contributions employees make to their 401k account. Employers match 401k contributions based on the annual amount that an employee contributes. The way that you match contributions depends on the terms outlined by your 401k plan provider.
Usually, employers match a percentage of employee contributions, up to a certain portion of the total salary. However, some employers may choose to match employee contributions up to a certain dollar amount, regardless of the employee’s salary.
When you hire a 401k plan provider, employers and employees can significantly benefit from the collaboration. Working with Canal HR can allow employers to focus on their business while giving employees the chance to save for their future after retirement.
The thought of establishing a 401k plan within your employee benefits can seem overwhelming. Once you partner with a trusted 401k plan provider, the process will be stress-free and you will gain these benefits:
Employers can deduct contributions on the company’s federal income tax return unless the contributions exceed certain limits.
Tax deferrals are granted to employers until contributions are distributed to employees after retirement.
Employee retention and satisfaction will increase as a result of collaborating with a 401k plan provider. By offering retirement plans, you can attract new employees and reduce turnover. Employees who are making an investment in their future through retirement plans may be less likely to move on to other companies.
When you offer retirement plans to employees, you could potentially gain access to better plans yourself. Many plans actually require the employer to offer the same benefits of a 401k to their employees.
As an accredited 401k plan provider, Canal HR helps employers design and build a more attractive benefits package by offering a retirement plan. At Canal HR, we utilize Fidelity NetBenefits as custodian and plan participant to offer you added security and administration of your company’s assets.
Canal HR handles plan administration for you, including compliance testing, recordkeeping, and reporting. That means less time worrying about filing a Form 5500 and more time focusing on your business. Also, we will perform annual audits and deal with administrative costs associated with the 401k retirement plan.
Employee Contributions can be standard, pre-tax, or Roth contributions
Over 20 non-affiliated mutual fund options–no load or load waived
Participant access via Internet and Interactive Voice Response system
Participant loan provision
Quarterly statements
Additional catch-up contribution provision provided
Employer contribution (optional)
Professional customer service Representatives available
Consider more than just cost when finding the right 401k plan provider for your business. At Canal HR, our staff of reliable and experienced HR professionals ensure that every intricate detail of your company’s 401k plan is fulfilled.
Canal HR is with you every step of the way while you improve your employee benefits package. Learn more about offering employee benefits when you make Canal HR your trusted 401k plan provider.
To see how Canal HR makes it easier to give your employees the retirement plans they deserve, contact us today to schedule a free consultation with one of our experts. Send us an email to speak with Canal HR’s internal 401k administrator, for more questions about this program.
