Why You Should Hire a Third Party Administrator for Your 401(k) Plan

The 401(k) plan is one of the most important and influential benefits that a company can offer to its employees. It is so vital that there are many potential employees who won’t even consider going to work for a company that doesn’t offer this service. They understand that the value that a 401(k) plan can offer to them is far greater than just the wages that they gain from working for a particular company. As such, it makes sense that many company owners have questions about how to administer a 401(k) plan properly. Here at Fiduciary Advisors LTD, we have some answers.

Do I Need a Third Party Administrator for My 401(k)? 

Perhaps you have the idea in mind that you will simply administer the 401(k) plan yourself. However, this is a bad approach. Not only is it extremely complicated to administer a 401(k) plan on your own, but it can be quite costly as well. If you are not careful, the costs of the plan can overwhelm you and your staff, and it may quickly become impossible for you to keep up with all of the various aspects of the plan that you know you need to deal with. 

Instead, you ought to consider using a third-party administrator to help you get more done at a reasonable rate. 

What Does a Third Party Administrator do for 401(k)?

There are many things that a third-party administrator can help you out with when it comes to your 401(k) administration. For example, you will want to lean on them for: 

  • Accurate tax reporting.
  • The ability to offer your employees a variety of different investment options.
  • The chance to provide all employees with a program that is run independently (lack of bias).

There is enough on your plate as it is without adding in more work on top of what you have to do. You can use a third-party administrator to take some of the difficulties off of your plate. Remember, the investments that you have to offer to your employees for their retirement is one of the greatest benefits that could possibly be offered to them. Making sure you get this benefit set up just right is exactly the way that you need to go about things. 

When you look over the different third-party administrators that you may want to use for this project, just remember that you should go for one that offers you the best deal, and one that has an extensive track record of helping companies get the services they need at a price they can afford. You may say that it is challenging to find all of that in one package, and that is true to an extent, but you can make it happen if you look over the history of the administrator to discover the kind of work they have done for others. 

Finally, make sure they offer plans that include investments that you would like to put money in yourself. If they can’t even do this, then they are not a useful administrator, and you may be offering your employees something that just doesn’t get the job done. Make sure you don’t put yourself or your employees in this position.