Starting a 401(k) plan for your small business can seem like a daunting endeavor. Well, not anymore! In this episode of Andrew Answers, Andrew gives you a short rundown on what you need to do to provide retirement savings for your employees at work. He talks timing, plan features, and what to look out for. Here's to saving and Andrew's mustache!
FROM THE VIDEO:
Hello, and welcome to another episode of Andrew Answers! I'm Andrew. This episode's question comes from Bob who is a small business owner and he asks, "I want to set up a 401(k) plan for my small business in 2014. What do I need to do?"
Well, it's a pretty easy process. First things first, make sure you go through the 'shopping around' process and give yourself enough time for that, because you want to find the right provider for you. Now once you get over that, you'll go through the whole sales process, sign your agreement for services, and then the most important part of setting up a plan is making sure you sign your plan documents. Since you want a plan in 2014, the sooner you sign your documents the sooner you can get the enrollment process started for your employees. Make sure you get any new documents for a plan signed by December 20th, that way you give your employees enough time to think about how much they want to participate. That way, in that first payroll of 2014 they are going to be ready to go and saving as it happens.
Now, every small business is different which means your provisions are probably going to differ depending on what kind of company you are. Certain provisions are really important for small businesses, such as Safe Harbor. While you've missed the Safe Harbor deadline for this year, you can basically start a Safe Harbor plan at any point during 2014 up until around October 1st. What is a Safe Harbor? If you are a small business owner who wants to maximize contributions and you don't think your employees are going to be able to do that, that's what it's there for. You put in a small amount on behalf of the employees while you're able to pass testing at the end of the year. But that's an Andrew Answers for another time! In the meantime, make sure you find the right provider, get your plan documents signed around December 20th so you can get a plan going by 2014.
If you're a conversion plan, which means you already have a plan in place and you want to move your 401(k), that's a bit of a longer process. If you have questions about it, feel free to write me below. And if you have any other questions such as, 'why is Andrew wearing a mustache?', simply type in a comment where you are seeing this video, on our Facebook page or on our Twitter feed, and I'll be able to answer them directly. Maybe your question will be on the next episode of Andrew Answers!