Retirement plans can be pretty complicated to figure out. Knowing what investments are available, how to handle contributions, and the smartest way to invest for your future is no small task. It takes a lot of attention and thought to know how you want to prepare financially for retirement. But it gets even more complicated when you run a business, and need to make retirement plan decisions for your entire business. Picking the right plans for your business doesn’t have to be so complicated. Here are three things you need to know to operate a retirement plan for your business.


The first thing that you need to know about operating a retirement plan for your business is the costs of running a retirement plan. There are a few aspects of cost to consider. Depending on your plan provider there may be a one-time startup fee for each new participant that enrolls in your 401(k)-retirement plan offering. Then there are maintained and administration fees, which can cost up to $3000 or more per year. And finally, there is the optional employer contribution match. This can cost you several grand per employee per year. The good news is all of these costs are tax deductible.

Regulatory Compliance

Another important thing to know about operating a retirement plan for your business is that it must fall under regulatory compliance. If your business has a certain number of employers, then your retirement plan is required to go through annual non-discrimination testing to make sure your employer match is not unfairly benefiting highly compensated employees. A safe harbor plan doesn’t have to go through non-discrimination testing. These plans guarantee a match to all employees so that discrimination test in is deemed unnecessary.

Government Filing Requirements

The final thing that you need to know about operating a retirement plan for your business is the government filings which are required. Every year you are required to file a form 5500 which includes information like your retirement plan offerings, how many participants there are and other information to make sure that you are following all rules and regulations. The good news is the form is fairly simple and won’t be much of an added stress to your life.

Offering a retirement plan to your employees is a great bonus to offer. But there are a few important facts to know. Make sure that you understand these three things and you are ready to offer a retirement plan at your business.

Check out this article on why insurance is critical to running your business

Leave a Reply

Your email address will not be published. Required fields are marked *

Post comment