Tips to Choose the Right Third-Party Administrator for Your Small Business 401(k) Plan

by Susan Atkeisson on May 16, 2019 Finance and Investments 495 Views


Are you a small business owner, and decided to establish a 401(k) qualified retirement plan for you and your employees? At that point, your first question might be “Who will take care of the plan’s recordkeeping and administration requirements?” Then seek the help of third-party administrator like Heartland Consulting Group, Inc.

What is a 401(k)?

The 401(k) plans is named for the section of the tax code that governs them, arose during the 1980s as a supplement to pensions. It is a retirement savings plan that will be helpful for the workers to save and invest a piece of their paycheck before taxes are taken out. Taxes aren’t paid until the money is withdrawn from the account.

Choose the Retirement Plan Administrator Who Offer These 401(k) Plan Options

In today’s AI world, retirement plan accounting process different and complex than before. So, it is essential to choose the right plan that fits your needs and the right company who have these type 401(k) administration plan options.

1- Safe Harbor 401(k) Plan

The safe harbor 401(k) plan enables employees to contribute a percentage of their salary with each paycheck in addition to employer contributions. Plus, with safe harbor 401(k) plan, you will not be required to undergo top-heavy and non-discrimination testing which cuts out a lot of paperwork and expense. This eases complicated administrative requirements and costs for the business owner.

2- Simple 401(k) Plan

Did you know employers can opt to contribute up to 3 percent of their employees' salary into the simple 401(k) account?

Like the safe harbor 401(k) plan, does not need to undergo testing. It is a blend of a simple IRA and a traditional 401(k) plan because it offers features that appear in both plans. Unlike the traditional 401(k) plan, eligibility is dependent on whether or not your business has less than 100 employees who have been compensated at least $5,000 within the previous year.

3- Traditional 401(k) Plan

Traditional 401(k) plans gives employees a variety of investment options. This plan allows the small business owner to change the amount of employer contributions every year. For example, if business is slow one year then the small business owner can choose to decrease employee contributions to compensate.

What Are The Day-To-Day Duties of the Right Retirement Plan Administrator?

Check does the retirement plan administrator who you have chosen do the day-to-day duties, which are mentioned below. If so, they are the trusted source to handle yours and your employee’s retirement plan accounting.

• Interpreting and explaining plan provisions

• Preparing and filing plan tax forms

• Calculating employee and/or employer plan contribution amounts

• Deciding when an employee becomes eligible to participate in the plan

Half of all Americans are set to meet their retirement saving goals—the earlier you start planning, the better.

The author of this article is a professional retirement plan administrator with over a decade of experience in the industry. In this article he discusses a few tips to choose the right third-party administrator for your small business 401(k) plan. To learn more, visit

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