What Business Owners Should Look for in a 401(k) Advisor

401(k) | Retirement Planning | Exit Strategy Advice | Business Strategy | Retirement Tax Planning | Tax Strategy

 Matt Baisden By: Matt Baisden

We know business owners don’t start their business to oversee healthcare plans or manage a 401(k) plan. However, benefit plans are necessary to recruit and keep employees, so it’s important to find someone you can trust will help your plan, your employees, and your business.

Does Your Advisor Offer Fiduciary Commitment?

There are two qualifications that should be prioritized when choosing a 401(k) advisor. The first is to have an advisor sign as a 3(38) Investment Manager; having an advisor sign as a 3(21) may leave you open to more fiduciary liability as I explain here. The second is using a CEFEX certified advisor because they undergo an annual third-party audits to ensure they follow fiduciary best practices.

Specialty Experience Managing Retirement Plans

Using a 401(k) advisor specializing in managing retirement plans is another important attribute. 401(k) plans are subject to annual Department of Labor testing, with potentially significant consequences for failing. Having an advisor who understands those tests can help ensure your plan runs smoothly. One of the designations that can signal an advisor’s understanding of these issues is the Qualified 401(k) Administrator designation.

Do they Have a Qualified 401(k) Administrator (QKA) Designation

The QKA is a technical designation focused on the legal aspects of 401(k) plans such as plan design, Department of Labor testing, and IRS regulations. According to ASPPA: “The QKA credential is the national standard for all professionals working with 401(k) retirement plans. Attaining the QKA credential illustrates commitment to the profession and competence in defined contribution plan administration.”

Simply put – an advisor with a QKA designation is better equipped to proactively plan and advocate for business owners and their retirement plans.

Key Issues That Can Impact the Effectiveness of Your Plan

With an advisor in place that meets the above criteria, you can now turn your attention to key issues that can impact the effectiveness of your plan for yourself and your employees.

  • How are changes in your business today going to affect how you and others benefit from the plan in the future?
  • Are you nearing a Top-Heavy test failure and how much could that cost?
  • Are you getting refunds for putting too much in the plan?
  • If you acquired a company, are you aware which employees need to be covered by the plan?

Understanding these types of issues and planning before they happen can lead to a much better 401(k) experience for you and your employees. If you would like to discuss how we could help your corporate retirement plan - schedule a meeting with me today.


Email Matt

Call Matt

Disclaimer: This material has been prepared for informational purposes only and should not be used as investment, tax, legal or accounting advice. All investing involves risk. Past performance is no guarantee of future results. Diversification does not ensure a profit or guarantee against a loss. You should consult your own tax, legal and accounting advisors.

Related Posts

With four years’ of portfolio management experience under his belt, Matt came to Plancorp in 2016 to join our Retirement Plan Advisors practice. He loves helping business owners build retirement plans that make their companies stronger and give owners the ability to retire when they want. More »