Employee Details Required for 401k
September 19, 2011 Leave a comment
My friend runs a non profit organization and he recently set up a 401k plan for his company quickly and easily. I own a designer clothes shop in Harlingten. Can I set up my 401k the same way? What details about my employees will I need to collect to establish the account?- Misty Young, Texas.
Misty, setting up a 401k for your small business is pretty much the same as doing it for a non profit organization. Today, the entire process is very easy and it can actually be completed within a few hours at the most. You can sign up with a 401k provider like Vanguard or Fidelity to set up your plan. Most small businesses, however, prefer to use a DIY plan like http://lifecycle401k.com. These plans can be set up quickly right from the comfort of your home or office. You can manage the plan and carry out monthly updations in minutes and keep track of the plan easily too.
You also save a lot of money with such DIY plans because there is minimal administration cost. Your employees can keep tabs on their 401k account status easily with such plans too which makes it easy for them to switch investments or keep track of loans they have taken. Look for DIY suites that come with a demo so that you can try out the package before you actually sign up for it. Check if it is user friendly and if it has all the investment choices you want to include for your employees.
To set up the plan you will need to enter some information about your employees and also your company. For example, details of compensation drawn by them, their designation, the date of hiring and similar data will be required. You can decide if you want to make matching contributions and if so, how much, when you set up the plan.
Remember that you can always make contributions without specifying so in the plan document. Or, you can change your plan document later on to include employer contributions. If your business is just starting up then you may want to avoid committing yourself to a specific amount of employer contribution right away and simply add the provision later on.
