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Our Company  401(k)
401(k) | 412i
One of the easiest and most effective ways to save for retirement is through an employer-sponsored qualified plan, a 401(k). Plans offer significant tax advantages, convenience, and flexibility. Employees contribute money out of their paychecks before it's taxed and the earnings grow tax deferred until the money is withdrawn. 401(k) plans are a variety of the traditional Profit Sharing Plan. Historically at year end companies would distribute profits to employees in a pre-tax profit sharing plan. Section 401(k) of the Internal Revenue Service code allows for employees to contribute their own money into the profit sharing plan. Employee contributions can be matched with employer money and the company can still also make a profit sharing contribution to the plan if they so choose. 401(k) plans are built around a complex system of tax rules and non-discrimination testing that has to be done to insure that the plans meet IRS guidelines.
Common Issues that we see with 401(k) plans not handled by First Financial Group associates:
- The Company/Employer sponsoring the plan is using an off the shelf product from a single fund company or limited brokerage offering. There are myriad of offerings and platforms available today to allow employers to offer almost any combination of funds in their 401(k).
- Enrollments and Communication to employees is done by an enroller, not a licensed broker or investment representative. This leaves the employees to determine appropriate allocation, account diversification and how the 401(k) fits into their financial plan.
- A broker sells the plan and then never revisits to work with the employees. It isn't enough to offer a 401(k) plan to employees, they need to be educated and re-educated regarding the plan, it's rules and investment planning.
- A company offers no investment guidance. The Department of Labor has provided a clear definition of what the Trustees of a plan can do to alleviate their fiduciary responsibility to employees regarding the investment of their accounts. If employees are coming to the head of Human Resources or the Controller for investment guidance, then there is a problem. Non-licensed employees, potentially Trustees, should never make investment recommendations.
- The firm has the wrong plan design. There are modifications of 401(k)'s, like Safe-Harbor plans, and then there are modifications of the Profit Sharing Plan, called New Comparability plans, that allow greater ability to meet the specific skewing objectives of the owner.
- Financial Planning considerations aren't given during the enrollment or discussion of the 401(k) with participants. Although high participation is important, it should not be encouraged carte blanche. It may be inappropriate for an employee to participate until other important personal financial issues have been addressed first. 401(k)'s are extremely important in personal planning, but can be detrimental if the client has credit card debt, is renting, needs the money before they turn 59.5, etc.
Our representatives not only provide investment direction, and education, but at the origin of the plan they work with the employer to develop a plan that meets their objectives. The amount of money invested annually by employers in administration cost, matching contributions and profits sharing can be staggering. First Financial Group associates seek to deliver to an employer the correct plan that will fulfill their investment and design objectives.
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 Business Continuation
Employee Benefits
Executive Compensation
Retirement Plans
Etc.
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