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401k Plans Are A Pain in the A**!

401k Plans Are A Pain in the A**!

September 21, 2020

401k Plans are a Pain in the A**!

If you’re a plan sponsor of a 401k plan, at times they almost seem like they are more work than they are worth. We have a piece called 50 chores of the 401k Plan Sponsor.  That sounds like fun, right?  Who doesn’t want more chores?  On top of that you hear horror stories about companies getting sued because they did something wrong with their 401k plan.  Who wants to mess with that?

On the other hand, the benefits provided by a 401k plan are tough to beat.  Here are some of the advantages of a 401k plan from the employer or plan sponsor’s perspective.

  1. Employers can deduct contributions on the company’s federal income tax return as long as the contributions don’t exceed certain limits.
  2. Contributions and investment gains grow tax deferred.
  3. There are business tax credits available for startup plans that can help make the cost of starting a plan less expensive.
  4. Having a 401k plan can be a competitive advantage in hiring and keeping employees.

 From the employee’s view, there are compelling reasons to want to invest in a 401k plan as well!

  1. Tax deductible contributions.
  2. Tax deferred growth.
  3. Forced Savings.
  4. Employer Match, at least in a lot of cases.
  5. Some plans offer 401k loan options.
  6. 401k assets are free from creditors.
  7. 401k assets can be moved from one employer to another after a job change.
  8. Finally, for most employees, their 401k plan is a major part of their future retirement assets and are a key component of their future income during retirement.

What Should an Employer Do?


Ok.  We have determined that while 401k plans can be a lot of work for the plan sponsor, they do offer some benefits for employers and are almost essential to employees.  Is there a way the help the plan sponsor to reduce their fiduciary liability, ease some of administrative burden while at the same time providing a great plan for employees?  Why yes, in fact there is!

On Thursday, September 24th at 11:00 a.m. MST, I will be hosting a webinar with Lyle Himebaugh, CEO of Granite Group Advisors.  We are going to talk about some of the short term changes to 401k plans because of the Covid-19 Pandemic and the Cares Act. 

We will also show employers and plan sponsors some ideas on ways to reduce their fiduciary liability, reduce plan costs by benchmarking your plan and helping your employees to better navigate their own plans.

You can register for the webinar here:

We are going to keep the webinar to about 30 minutes.  We will be available to answer questions after the presentation or you can reach out to me and I will be happy to help as well.

Thanks for reading.  I look forward to having you attend our webinar.  KB