Having a 401K plan is critical to ensuring a financially secure future for yourself and your employees. This necessity becomes even clearer as we face the impacts of the COVID-19 pandemic. The typical fees associated with managing 401Ks may hit even harder now, with the extreme financial uncertainty millions of workers and employers are experiencing. There are numerous ways in which you can manage your plan to make it work for you during this time. Instead of settling for a traditional 401K, you can migrate to an online 401K, where there are several advantages to be found.
The Benefits of an Online 401K Provider
The drawbacks of a traditional 401K may not be readily apparent if this is the only form of this plan you’ve had thus far as an employer. Upon seeing the benefits of an online 401K provider, they will become much clearer. Here are a few examples:
Payroll integration. An online 401K provider will allow you to store your data in a cloud-based payroll system. This way, the designated employees in your company will still be able to manage the necessary aspects of your plan, but you can avoid the costly mistakes that come with a traditional system.
With a traditional 401K, employers must depend on a single person (or a small group of employees) to manage all the relevant factors of the plan manually. This practically openly invites human error, which can have serious consequences for your retirement savings. (Since the 401K is regulated by the Internal Revenue Service, or IRS, and the Department of Labor, mistakes on your 401K are extremely costly in terms of time and money. This can be devastating as you may not be able to afford these expenses as you emerge from the ongoing economic crisis induced by the pandemic.)
Minimal fees. With an online 401K plan, you don’t have to deal with the stresses of excessive, hidden fees. Many providers specialize in supporting small businesses and individuals, so there are numerous low-cost plans to choose from, all of which are clear in the possible fees in the plan.
Sadly, most people using traditional 401K plans are subject to excessive fees – only 27% of investors know how much they’re paying in 401K fees, and further, 37% had no idea they were paying fees to begin with! These hidden costs can have a severe impact on how much you’re able to put away over time. Depending on their severity, they may even require you to work over a longer period to achieve a financially stable future.
How an Online 401K Provider Can Help Your Employees
Your employees can reap the benefits of an online provider as well. They’ll enjoy:
- Constant access to your plan in case you need to check balances, adjust contributions, etc.
- Finance management tools
- Transparency in plan policies
By using an online 401K provider, you can significantly improve the financial futures of both yourself and your employees. During this time, you need greater, more streamlined management options for your finances. Find the perfect provider for you to help you maximize your 401K contributions and withstand the impacts of the current pandemic.