Retirement planning is a boring thing for many individuals, but if you have interest in retiring in comfort, and without financial struggles throughout later life, then planning for retirement early is an essential step. With the rate of inflation rising and saving rates hovering at a tenth of a percent, investing in a retirement plan is the only way you are going to have the savings you need to maintain your quality of life during retirement. But not all retirement plans are created equally. Make sure that you are checking these three things before selecting a retirement plan for your needs.
The first thing that you want to check before selecting a retirement plan is what your investment options are within that plan. Depending on your retirement plan and the provider, your options for investing may be limited. For instance, if you want to be able to invest in cryptocurrency or overseas markets in your retirement plan, you need to make sure that is allowed in your plan and by your provider. Ask your potential provider for your investment options and make sure that their offerings align with your investment goals for your retirement plan.
Another crucial thing that you should check before selecting a retirement plan is the administrative complexity of your plan. The plans that your business decides to offer can come with a range of administrative complexity for you, and unfortunately the most common plan, a 401(k), comes with a lot of complexity. 401(k) plans must go through a series of tests to ensure that they don’t favor certain employees. A safe harbor 401(k) circumvents these tests, but comes with other concerns, like mandatory employer contributions that should be considered as well. At the end of the day, you want to select the plans that will be the least complex to run for your business.
The final thing that you need to check before selecting a retirement plan for your business is the fees that come with any particular plan. Fees can quickly add up and make a major dent in yours and your employees retirement savings. Plans can charge setup fees, administrative fees, transaction fees, advisory fees, and other fees. Make sure you understand exactly how much a plan is going to cost before deciding that it is your best option.
Retirement planning is boring and never easy. But for a business, knowing how you are offering retirement plans and what they will look like for you and your employees is essential. Make sure that you are checking these three things before selecting a retirement plan that is right.
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