How To Choose a 401k Program for Your Company

As an employer, seeking the best benefits to provide for your trusted staff is a key in both hiring and retention of staff members.  There are many structures to choose from in a 401(k) retirement account and the task can seem daunting.

The selection process involves a good deal of reading.  It involves a good bit of conversation with other employers and, perhaps, brokers.  The time spent studying, however, is worth the payoff when you’ve established a program that your employees really like, and possible employees find a nice enticement to work for you.  The next step in the selection process is the reading of prospectuses of varying plans—either online or in print—to make an educated decision on which program to choose.  Many of the plans available today are structured so that the employer can place a percentage match to what the amount of income is that the employee invests in the plan.

Another step in the selection process should be consultation with local representatives of any given 401(k) program you have studied.  The representative should at least appear to be thoroughly knowledgeable about the program in question and should be able to give you good guidance.  If the concepts of money and investing give you the shakes and shut down your rational thought processes, speaking with a consultant will go a long way toward helping you to make the right decision.  Conversations with other employers can also be very useful in the setup of a 401(k) program.  They can share with you the ups and downs they faced in the selection process to help you avoid as many pitfalls as possible.

Making the final decision is up to you (or a board including you) and that can weigh heavy on you.  The release comes when you implement the program and the employees like it and start using it.  Once you’ve decided on the program you can decide what to add to it as employer.  There are several matching options you can choose on most programs where you can match up to 100% of what the employee invests.  This is a very attractive feature for prospective employees—particularly if your business is in good financial shape.  If your company is publicly traded you can match employee investment with company stock.

While the decision is a tough one, the chances of making the right decision are in your favor—even in this economic slowdown we are experiencing today.