5 Common 401K Mistakes made by Employers
401ks are meant to recruit, reward and retain employees. After their paycheck and health insurance, employees usually rank their 401k as their most important reason for working at their company.
Here are 5 common mistakes you can easily avoid.
Ignoring the plan investments.
Even with the Department of Labor, fiduciary roles are being pushed aside. As the trustee of the plan, you have a fiduciary responsibility to make sure that proper investments are being offered to your employees. Multiple lawsuits have been filed in the last few years in this area demonstrating the need for attention and care. Ignore at your peril.
Not meeting with your plan’s advisor.
At least twice a year, and preferably quarterly, you should meet with your advisor. You should set and follow a compliance calendar to ensure that all the administrator’s requirements are being followed by the record-keeper, third-party administrator, custodian and most importantly, you.
Not making employer contributions investment on an immediate basis according to the plan, makes employees have a lack of confidence and trust in the employer. They can potentially miss out on a market gain which can set you up for one of those pesky 401k lawsuits. The best option is to automate the process.
Missing the plan’s 5500 tax return filing date: among other deadlines.
401k plans have lots of deadlines. The different parties to the plan, recordkeeper, TPA, and investment advisor all have different deadlines throughout the year. Even though it is technically their responsibility to follow and meet the different deadlines, at the end of the day the buck stops with you. Set reminders in your calendar to remind you of what needs to be done when.
Not updating employee notices and not sending them to the employees.
Some examples Annual Safe Harbor Notice, Summary Plan Description, and any changes to the investments.
If you want a compliance calendar that you can use to help you keep track of the different parties to the plan click here.
Read more about how Rubin Wealth Advisors can help you and your business with 401(k) planning.