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How do I administer a 401k plan for my Small Business?
Home » Small Business » Small Business 401k » How do I administer a 401k plan for my Small Business?Administering a 401k plan is not for the faint at heart—the pressure of making wise investments combines with the responsibility to both the government and the employees to keep good records, and you end up with a lot on your mind. Employees place a lot of trust in their 401k plan, and you need to prove your small business worthy of that trust. In some cases, your company could be considered liable if you invest foolishly, but in any case, you should want to protect your employees’ savings.
To that end, take care to decide who exactly will be in charge of investing the employees’ money. If you invest in a mutual trust fund run by trustees, make sure you have competent and ethical trustees. Some businesses allow employees to direct their investments themselves; if so, you will need to compile some information about potential investment choices.
Whatever you do, maintain good communication with employees; after all, it is their money. On a regular basis, provide employees with reports on their contributions, the company’s contributions, accrued interest, and current figures. Make yourself available to answer any questions, and go directly to employees with any changes to their plans.
In addition, unless you are doing all the work yourself, keep in touch with the directors of the fund—whether that means bank officials or trustees or anyone else. Dialogue with them regarding any risk factors and levels of return. Make sure that whoever is in charge of the money keeps you completely informed on the status of employee accounts.
If you are doing the work yourself, don’t forget to file the federal reports. To this end, keep impeccable records of contributions, earnings, expenses, distributions, and totals. Don’t hurt your business by incurring fines because you simply missed deadlines or kept poor records.
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- How do I administer a 401k plan for my Small Business?