All investments are subject to risk, including the possible loss of the money you invest. Additionally, many small companies may not feel they or their employees would see much benefit due to a lack of interest in participating. Three options stand-out depending on what you want to accomplish with your plan and how much flexibility you need. Fidelity’s 401(k) plans for small businesses through Fidelity Workplace Services can help you offer competitive benefits to your employees. Today, we’re announcing Betterment for Business, the only turnkey 401(k) service that includes personalized investment advice for all plan participants. How important are managing future taxes (a Roth option) versus my tax needs today? Distributions, including earnings, are includible in taxable income at retirement (except for qualified distributions of designated Roth accounts).
Following salary and health coverage, retirement benefits are the third-most-important factor in driving employee loyalty in small businesses, according to a 2012 MetLife study. It is a violation of law in some jurisdictions to falsely identify yourself in an email. All information you provide will be used by Fidelity solely for the purpose of sending the email on your behalf. Simplify your planTake a tour of Small Business Online to see how you can manage and make contributions to your plan.
What structure works best: It’s tempting to offer a robust plan with a large number of investment choices. Elective salary deferrals are excluded from the employee’s taxable income (except for designated Roth deferrals). Offering a retirement plan is a smart way to help level the professional playing field between your small business and larger companies.
What they cost: Every plan comes with fees, which employers often pass along to workers. Guide of Money magazine is based on mutual funds and ETFs that are low-cost and produce long-term returns that match or beat their benchmarks. What help they offer: Service is another important consideration, since many small firms may need help introducing the 401(k) plan to employees and providing ongoing investment advice. For financial advisors, Betterment for Advisors provides an automated service so that advisors can increase efficiency and spend more time building relationships with their clients. Find the right investmentsWe offer a diversified fund lineup with no minimum initial investment that has delivered solid long-term investment results. You may not know this, but there are quite a few different retirement options out there and many specifically designed for small businesses. One potential drawback to these types of arrangements: They may not be attractive to new participants. Fund share prices will fluctuate, so investors could lose money if they sell when prices have fallen. Even the least expensive plans do not lead to solid retirement readiness; employees need personalized guidance. Owners can participate in the plans as well, and they can be set up for companies that are essentially sole proprietorships.
People who do have employer-sponsored plans—including Betterment employees—don’t have it much better. An employee other than an owner, a business partner, or a shareholder of a corporation and their respective spouses. Since Betterment launched in 2010, our mission has been to improve the way people save and invest through smarter technology.
Retain valuable employees who want retirement options in their benefits package. The main reason: The plans are too expensive and too time-consuming for their employers to implement. Simply answer these questions and you’ll start honing in on the best fit for your business: . Broad range of investments from which to choose, including Fidelity mutual funds. Other things to consider include whether you want a profit sharing option or not, and do you have a business that experiences high employee turnover. For individual investors, Betterment offers automated investing and personalized advice based on specific goals, such as retirement, college savings, or building wealth.
SubscribeOn a recent business trip, I had a lively conversation with a small business owner who was on a mission to start a retirement plan. If you expect high turnover, a vesting schedule for profit sharing and/or matching contributions can be a great way to go. Enjoy tax advantages that may be available to you as an employer offering the plan.