After 30 years in business, Jayson Miller, co-owner with his father Tom of design/build firm TN Miller, in Grapeview, Wash., is looking into a 401(k) retirement program for his 11 employees. With so many options available, he contacted T.J. McCown, an agent in the financial services division of the Fournier Group based in Tacoma, Wash.
"The reasons most owners take on a 401(k) plan is for themselves and to help them attract and maintain good employees," McCown says. Owners will have a retirement plan they can put money into; it creates another investment pool that's not tied to the business; and it's a tax shelter. McCown suggests looking at the following:
- Adviser's role: He or she should be responsive to your needs. The goal is to meet your investment needs with the right plans and options. Find out what you should expect from them for ongoing customer service.
- Costs: Vary by plan design and investment options.
- Plan investments: They should be performing well and have been around for 10 or more years.
- Which plan: Options include a 401(k), Simple IRA, SEP IRA, Safe Harbor 401(k), profit-sharing plan, or defined benefit plan. An adviser will help determine which plan to choose. With a 401(k), an employer may match contributions, but most matching programs are discretionary and can change every year. Some companies choose to go with a Safe Harbor 401(k) plan that does require the company to match every year, but that's their choice and also carries some additional benefits. Most of these options are tax-deferred plans.
Miller has not yet determined which plan is right for him and his company. He knows he'll need about $100,000 more annually to follow through. But, he says, "I feel it's important to look out for those who work for us. I have a social responsibility to do this."