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  • Writer's pictureMike Monroe

I have never offered a 401k plan to my employees. What should I expect?

Updated: Jan 2, 2023

Offering an ERISA tax qualified 401k program is an important tactic that supports a larger business strategy of attracting and retaining quality staff. There are many choices available to employers.


Step 1: Identify market options.


401k programs are available through online providers, through the help of an advisor or lawyer, or through alternative program-based solutions. It is important to consider the qualifications of the 401k providers, who your main point of contact is, and the features available through the 401k provider. Typical questions that will be addressed in the evaluation phase include:


  • What is the total cost of offering a 401k program to my employees?

  • Will the service provider have to build the program from scratch or is it pre-built?

  • What plan design features are available?

  • Where are the assets held? Will the assets be held safely?

  • Who makes investment decisions?

  • What financial institutions and funds are available? Are their restrictions?

  • What are my responsibilities as the employer?


Step 2: Sign and Onboard


Once an employer reaches a decision to offer a 401k, they must execute contracts with service providers of the 401k. In most cases, the employer will have to executecontracts with legal, TPA, recordkeeper, asset custodian, and advisor service providers.


If the employer chooses an online or PEO solution, the employer may have to execute fewer contracts with service providers.


If the employer chooses a pooled employer program (PEPs), the employer will execute one contact.


The employer will work with TPA/Recordkeeper to set-up payroll transmissions and to draft communication to participants. This typically takes between 30 – 90 days. It will take longer to transition an existing plan than to start a new one.


Often, but not in all cases, the 401k provider team will provide training and education on how to use the 401k platform once it has been established.


Step 3: Administer the 401k


The primary employer responsibility throughout the year is to remit employee and employer (if any) contributions to the 401k provider in a timely fashion.


Other employer responsibilities throughout the year include reporting to participants, reviewing investment performance, procuring insurance and bonds, assessing service providers, performing discrimination testing, filing 5500 and performing a plan audit (if over 100 employees).


If the employer chooses an online or PEO solution, most of these responsibilities will remain with the employer. If the employer chooses a pooled employer program, most of these responsibilities will be shifted to the PEP.


Regardless of program type, the employer will always have the responsibility of remitting employee contributions to the 401k provider in a timely fashion.



Why Mountain West

The Mountain West 401k was specifically created to address the pain points and challenges employers experience in establishing and managing 401k's. Mountain West 401k is essentially a hybrid of bundled and unbundled 401k solutions, giving employers the best features from both solution types.


Interested in learning more? Go to the Mountain West 401k home page and complete the “get a quote” form today.


About the author


Mike Monroe is the founder of Mountain West 401(k).

Mike graduated from Gonzaga University with a finance and accounting degree and for the first 25 years of his professional career served in fiduciary roles as a Certified Public Accountant (“CPA’) and Chief Financial Officer (“CFO”) for many employers in the Pacific Northwest. Mike was the president of an employee benefits firm for 10 years where he launched the largest health insurance and 401k multiple employer programs for technology employers in North America, serving over 700 small business technology employers in 20 states.


Mike calls Tri-Cities home and volunteers as the President of the School Advisory Committee at Christ of King and U9 and U6 coach for the Three Rivers soccer club. Mike enjoys paddleboarding, soccer, skiing and hiking throughout the Inland Northwest.

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