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2 in 3 Small Businesses Still Struggle to Offer a Retirement Plan; Employers Should Consider New Type of Retirement Plan

401(k) Plans Financial Planning PEPs

Key Takeaways

  • Pooled Employer Plans (PEPs) were created specifically for employers with less than 100 employees.
  • New federal legislation allows small business owners to write-off and/ or receive tax credits by starting a new retirement plan; your new workplace retirement plan could cost you nothing for the first three years.
  • Utilize a retirement plan provider that already has 3(16) and 3(38) fiduciary services in-house to avoid regulatory and administrative headaches.

Taking small business advice from Fidelity Investments, is like taking parenting advice from the "fun aunt"- futile at best, negligent at worst.

Especially when 73% of small business owners feel they cannot compete with big business. It benefits big business to keep small business owners in the dark, so let's dispel some common 401(k) myths:

"Of those that do not offer a plan, almost half (48%) in the new Fidelity research say they do not believe they can afford one—"

✅ SOLUTION: The SECURE Act allows small business owners to start a retirement plan at no cost to them for the first three years of the plan.

"Other small business owners feel they are too busy running their company to focus on it (22%)-"

✅ SOLUTION: You need two types of fiduciaries to effectively shed your liability as a plan sponsor: a 3(38) investment manager to take on all of the financial and legal liability of the plan's investments, and a 3(16) fiduciary to handle all of the administrative and compliance duties of the plan. Unlike most providers, we offer both services with Fi401k Advisors, LLC- so you can actually focus on your business.

"And an equal amount (21%) don’t know how to start the process of offering a retirement plan."

✅ SOLUTION: Isn't it obvious? You give us a call, speak with a real person, (not a bot, not an unknowledgeable customer service representative) who espouses the expertise you need. We ask you a few questions to gather what it is you want out of your plan, and together we solve your problem in less than 10 minutes.

Moreover, The SECURE Act and SECURE 2.0 Act created a new kind of retirement plan, specifically designed for small businesses: a Pooled Employer Plan (PEP). A PEP allows multiple, unrelated employers to participate in a singular workplace retirement plan- aggregating the retirement savings of hundreds, if not thousands of employees. A PEP's fiduciary oversight must be the responsibility of a pooled plan provider and professional fiduciary. A PEP plan reduces the fiduciary liability and investment liability, requiring that an employer outsource the management and administration of the plan and the plan's investments. PEPs also simplify communication between the employer and the plan sponsor, lessen compliance requirements, and are eligible for tax credit opportunities. The only potential downside is that PEPs offer less flexibility in plan design than traditional 401(k) plans- however make excellent "starter" workplace retirement plans.

Small businesses MUST offer competitive benefits for their employees, or risk losing top talent. Big business and global conglomerate asset managers have no interest in helping the little guys. Stop searching for solutions in the same places that created them- duh?

Contact us directly to learn more about PEPs and receive a complimentary proposal:

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