The Frugal Fiduciary Small Business 401(k) Blog
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Switching jobs and unsure what to do with your 401(k) account? If you’d like to keep growing your retirement savings on a tax-deferred basis, you can leave your account in your former employer’s plan or roll it into your new employer’s 401(k) plan or an Individual Retirement Account (IRA). Rolling your account can seem like the obvious choice, but in some cases, leaving it could grow your retirement savings faster.
Not all 401(k) plans are created equal. Plans with minimal administration fees and top-rated investments can deliver dramatically higher returns for participants than plans with excessive fees and underperforming investments. Over time, these higher returns can help participants retire years sooner. Given the stakes, I recommend you settle for no less when saving for retirement.
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When a small business offers a 401(k) plan, it’s often a win-win for business owners and employees. A 401(k) plan can help businesses attract and retain talent, incentivize performance, and lower taxes, while helping employees – including the business owner – meet their retirement goals. If you're a business owner, you've probably asked yourself at some point what you and your employees stand to gain by offering a 401(k) plan. The answer is probably a lot. Here are some of the top benefits.
To plan for retirement, 401(k) participants should set a savings goal and develop a strategy for reaching that goal. To reach their goal at the lowest out-of-pocket cost, I recommend participants follow a simple 4-step strategy – start early, contribute regularly, invest appropriately, and lower fees. However, to reach their goal as soon as possible, participants will need some help from their 401(k) plan. Here are the three 401(k) plan features that can help any saver – including you – retire years sooner.
The priciest thing that most people will buy in their lifetime is retirement. Perhaps you’ve never thought of “buying” retirement, but that’s exactly what you do when you contribute to a 401(k) plan – you’re saving now to afford income in retirement. When you consider that income may need to last 10, 20, even 30 years, it’s easy to understand why retirement is not cheap.
On December 20, 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law. The legislation made many significant retirement plan changes, including later deadlines for adopting a new 401(k) plan or amending a traditional 401(k) into a safe harbor plan. For most small businesses, these changes took effect January 1, 2020.