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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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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) 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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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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Investments | Plan Setup | Fiduciary Responsibility | Financial Planning

401k Investment Advice – Pros and Cons of the 3 Basic Forms

By: Eric Droblyen
April 3rd, 2019

To meet retirement goals as affordably as possible, 401(k) participants must do two basic things – save early and often and invest appropriately. To invest appropriately, participants must construct - and maintain – an investment portfolio that includes a diversified mix of investments based on their time horizon (time to retirement) and risk tolerance. An appropriate portfolio balances the participant’s growth potential with risk of losses. Striking this balance is important. Otherwise, a participant could miss out on returns by investing too conservatively when young or sustain unrecoverable losses by investing too aggressively when older.

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Plan Design | Plan Setup | Fiduciary Responsibility

Hardship 401(k) Distributions – Frequently Asked Questions

By: Eric Droblyen
February 20th, 2019

A 401(k) plan may, but is not required to, allow participants to take a hardship distribution in times of financial stress. This type of 401(k) distribution can be a financial lifeline when someone has nowhere else to turn for cash. Last year, the IRS released a proposed regulation that made several changes to the 401(k) hardship rules, generally relaxing how and when these distributions may be taken. Both employers and 401(k) participants should understand how the regulation will affect their retirement plan.

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