401(k) Retirement Plans
Help keep your valuable talent with a simple and flexible 401(k) plan.
What is a 401(k) plan?
A 401(k) is an employer-sponsored retirement savings plan. It allows employees to contribute on a tax-deferred or after-tax basis while also giving an employer the option to contribute, such as matching and profit sharing contributions. Any taxes due generally aren’t paid until the money is withdrawn from the 401(k) account.
How does a 401(k) plan work?
The employee elects the 401(k) payroll contribution amount and how to invest it based on the investment options the employer has selected to offer. Most plans offer a spread of mutual funds composed of stocks, bonds and money market investments. Target-date funds, a combination of stocks and bonds that gradually become more conservative as the individual reaches retirement age are another investment option.
Employer matching and profit-sharing contributions are optional in a 401(k) plan.
How much does it cost to offer a 401(k) to my employees?
401(k) fees can be tricky. In many instances, fees are deducted from participant accounts and are not very transparent. There are typically two kinds of 401(k) fees—investment and plan administration expenses:
- Investment expense—The investment expense ratio is the revenue the investment company collects to manage the fund (fund manager, analysts, legal costs, etc.). Investment expense is generally not visible as a fee to the employer or employees because the fee is netted from the fund’s return.
- Plan administration fee—The plan administration fee is the fee the provider collects for basic administrative services such as plan record keeping, accounting, legal and trustee services.
Administration fee collection
There are a few ways providers collect administration fees:
- Flat dollar amount per participant—This is most equitable but it can be a deterrent for employees with smaller balances.
- Asset-based fee—A percentage of assets deducted pro-rata from participant accounts may work for some, but larger account balances will end up paying more.
- Revenue sharing from investment expenses—This method is least transparent.
High plan fees can significantly impact an employee’s retirement savings over time.
TriNet 401(k) plan
TriNet makes retirement planning easier and more affordable by offering a multiple employer retirement plan. Offering a TriNet 401(k) plan can help you attract top-notch talent, give your company a competitive advantage and help boost employee retirement savings. Plus, TriNet 401(k) plan fees are generally much lower than the industry average.
Employer plan benefits
By adopting a TriNet 401(k) plan you can help alleviate the strain of administrative, compliance and fiduciary responsibilities. TriNet handles:
- Automated contribution and data submission
- Compliance testing and Form 5500 filing
- Investment selection and monitoring
- Loan and distribution processing
The plan offers diversified investment solutions including:
- Investment choices from multiple investment management companies
- Menu of actively and passively managed funds
This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.
