• Shannon

How to Set Up a 401(k) in 4 Steps

If you are a business owner who’s considering starting a 401(k) plan for your employees and your company, then you are already headed in the right direction.  A 401(k) plan or similar type of retirement plan, is a great way to financially prepare for retirement.  Not only that, but a qualified retirement plan can help your business in other ways such as; reduce taxes, attract and retain talented employees, and enhance the overall company morale.


The reason why a 401(k) plan is so great is because the money deposited into the account can grow and employees can decide how much they want to defer/deposit.  If you, the business owner, decides to make a matching contribution, then employees can enjoy the added benefit of “free money”.  We’ll show you how easy it is to set up a 401(k) in 4 simple steps:


1.) Define Why You Want A 401(k) Plan

Ask yourself why you want to start a 401(k) plan.  This seems like a silly step, but this will help your financial adviser and Plan Administrator to design the perfect plan for your needs.  Which of these statements best fit you?

  • I am a start-up company looking to add a retirement benefit.

  • I would like my business to have the tax incentives of having a 401(k) plan.

  • I want to defer as much as I can before retirement, whether or not my employees participate.

  • I am an established company, looking to offer my employees an additional benefit.

  • I am the only employee and want to start a 401(k) for myself.

  • Other, or combination of the above.


2.) Select a Trustee

A trustee holds an important role in the administration process of the retirement plan.  It is the trustee’s responsibility to have the plan and its participants best interest in mind, therefore, the trustee must make decisions which are unbiased.  The trustee determines where the money/assets from the plan are held and also handles contributions, plan investments, and distributions….in other words, the trustee is in charge of handling the retirement plan money and in seeing that the plan is working properly.


3.) Find a Financial Adviser

If you aren’t currently working with a financial adviser, then TriStar can assist you in finding one that fits your company well.  It’s important to choose an adviser that understands your goals.  A financial adviser serves an important role in your retirement plan because he/she can help select the funds and investments which suit you best.


4.) Hire a Retirement Plan Administrator

A retirement plan administrator, like TriStar Pension Consulting, can take off much of the burden that comes with hosting a retirement plan.  A plan adviser’s role is to design a retirement plan and to assist the plan sponsor with the administration duties of the plan.  A retirement plan administrator typically helps with paperwork, preparing tax documents, and supporting the employer in their role as plan administrator.  Most often, TriStar will meet with the employer along with their CPA and financial adviser during the initial establishment process.

Once you have these 4 elements in place you are well on your way to begin deferring/depositing money into your 401(k) account.  Be sure to check out the other great resources on TriStar Pension’s blog.

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TriStar Pension Consulting | 405-848-401k | contact@tristarpension.com