Small Business 401(k) Blog

The Frugal Fiduciary Small Business 401(k) Blog

Get the latest industry news, deadlines and tips you need to know to help tackle your fiduciary responsibility needs.

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Provider Shopping | Plan Setup

How Much Time Does Annual 401(k) Administration Take?

By: Eric Droblyen
July 8th, 2020

According to AARP, Americans are 15 times more likely to save for retirement when they can do so by payroll deduction through a workplace retirement plan. However, while most large businesses – companies with more than 100 employees – sponsor a retirement plan, 51 to 71 percent of small businesses don’t. In a Pew Charitable Trusts survey, small business owners cited “resources required to start and maintain a plan” as one of the top reasons they don’t sponsor a 401(k) plan. To help more Americans save for retirement, overcoming this concern is essential.

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Testing | Plan Design | Plan Setup

How to Attribute Family Ownership When 401(k) Plan Testing

By: Eric Droblyen
November 27th, 2019

It’s impossible to complete annual 401(k) plan testing accurately without a clear understanding of the plan sponsor’s ownership structure. This information is used to determine the company’s controlled or affiliated service group status as well as the Highly Compensated Employee (HCE) and key employee status of plan participants. To make these determinations properly, certain “family attribution” rules must be applied correctly. These IRS rules exist to thwart ownership structures that would otherwise permit a 401(k) plan to discriminate in favor of business owners.

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401(k) Plan Design Checklist

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Subscribe to the The Frugal Financial Small Business 401(k) Blog and receive this free checklist for help in determing the best 401(k) plan design options and fit for your company.

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Plan Design | Plan Setup | Fiduciary Responsibility

401(k) Amendment Rules – Strict, but (Mostly) Straightforward

By: Eric Droblyen
September 18th, 2019

The day-to-day operation of all 401(k) plans must be governed by a written plan document that meets Internal Revenue Code requirements. Occasionally, 401(k) plan documents will require an amendment to reflect law changes or employer intentions. The Internal Revenue Service (IRS) has strict rules for plan amendments. It’s important for employers to understand them. Otherwise, they could miss the chance to make discretionary plan changes, accidentally cut back protected benefits, or face punishment for document non-compliance.

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Safe Harbor 401(k) | Plan Design | Plan Setup

Traditional Safe Harbor 401(k) Plan vs. QACA – How to Choose

By: Eric Droblyen
August 21st, 2019

Safe harbor 401(k) plans are the most popular type of 401(k) used by small businesses today. Unlike a traditional 401(k) plan, they automatically pass the ADP/ACP and top heavy nondiscrimination tests when certain contribution and participant disclosure requirements are met. This trade-off is well worth the cost for many business owners, who often bear the brunt of the consequences when their 401(k) plan fails testing.

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401(k) Fees | Provider Shopping | Plan Setup

Switching 401(k) Providers? What to Expect and Pitfalls to Avoid

By: Eric Droblyen
June 26th, 2019

If your 401(k) provider is an insurance, mutual fund or payroll company, there is a good chance your 401(k) fees are too high. If you’re a business owner, you have the power to lower them, but you may need to switch 401(k) providers to do it. This move can seem daunting if you have never done it before.

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Provider Shopping | Plan Setup | Fiduciary Responsibility

Employers Must Avoid 401(k) Providers They Can't Understand

By: Eric Droblyen
June 12th, 2019

One of my favorite Warren Buffet investing principles is “never invest in a business you cannot understand.” I think the rule of thumb is helpful in mitigating risk. If you’re a small business owner, I recommend you extend this principle to managing your 401(k) plan – never hire a 401(k) provider you cannot understand. What you don’t know about your provider can hurt plan participants and increase your fiduciary liability

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