401k plans offer employers much choice in terms of benefit structure. Employers are not required to make any contributions, but if they do, they must conform to certain standards of fairness. Vesting schedules pertaining to employer contributions can provide incentives for employee retention.
All assets of a 401k plan are held in a single trust account. A Third Party Administrator (TPA) maintains records for the employer and all participants, active and retired. The sponsor (employer) must file IRS Form 5500 annually. This is usually prepared by the TPA.
Advantages of a 401k plan include generous contribution limits and the ability to set rules that support other company goals. Plans can allow for loans to participants. Also, participants are not required to take withdrawals if still working, even if over age 72. The chief disadvantage is administrative complexity, which is eased by a TPA, but not without cost.
- Employee contributions – Optional, up to $20,500 through age 49, up to $27,000 if 50 or older.
- Employer contributions – Not required, but if done, must conform to plan’s chosen option for fairness.
- Maximum total contributions (2022) – Employee plus employer contributions cannot exceed $61,000.
- Administration – Much, most of which can be handled by a TPA.
Byrne Asset has partnered with ADP, Paychex, and TD Ameritrade/Schwab to present a 401k Plan with minimal cost, seamless data flow, and a platform that maximize the financial wellness of employees and employers. Contact us, or navigate to learn more about how our 401k plans provide: