Why Small Firms Should Set Up 401(k)s

From the Wall Street Journal.  Tips on why smaller firms, even as small as a single employee, should set up a 401(k). 

First the bad news: A recent study by SurePayroll found that more than 70{030251e622a83165372097b752b1e1477acc3e16319689a4bdeb1497eb0fac93} of small firms didn’t offer a 401(k) plan to their employees.   That comes at a time when the need for more money to retire is becoming obvious.  The good news is that the average amount in 401(k) plans is $80,600 according to Fidelity Investments.

The reason more small companies don’t start a 401(k) plan is the perception that they are difficult to start and hard to administer.  Neither is true.  There are a number of companies that administer 401(k) plans for small businesses.  In addition, local RIA firms will be happy to set up a 401(k) for you and meet with your employees to explain the plan.  The giant providers won’t do that. 

The financial advantage to business owners is significant.  You can put up to $17,500 away per year ($23,000 if you’re 50 or older), much more than into an IRA.  In addition, the plan attracts and retains good employees as well as being a good way for them to save for their own retirement. 

 


Korving & Company, LLC

Korving & Company is an investment management, financial advisor, and financial planning firm that specializes in working with retirees, couples who are serious about retirement planning, and women who have recently suffered the loss of a spouse.

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