Engaged employees can make your business more productive and result in a positive corporate culture. Most business owners we know want both of those elements. Phil is an estate planning attorney and has had a longstanding relationship with Capital Insight Partners (CIP). Over the years, we developed mutual respect and trust when referring clients to one another. Phil indicated he wanted to show his appreciation for his employees, demonstrate concern for their future and work to earn their loyalty. So, he came to us to build a 401(k) plan. He knew that some of his employees were living paycheck-to-paycheck and didn’t think they could save. Yet, he also knew it would make a tremendous difference in their futures if they could put away part of their paycheck now. As is too often the case, even as managing part of a law firm, he too had not saved enough. While that concerned him, as a business owner, he was also apprehensive about the cost of the plan and the complexities of its administration.
Our goal was to find a solution that fit this situation, met his objectives as a business owner, offered no surprises and was a snap to manage. When Phil was ready to set up the 401(k) plan, we explored alternatives for the plan structure and created documents to detail the process. This assured him that in the event of an audit he would be well prepared. In addition, we provided education about his role as a fiduciary and the work we undertake to make things as simple as possible. Aside from helping his employees prepare for retirement, he also hoped that highly-compensated employees like him could maximize their contributions without worrying about having money returned at the end of the year. Together with Phil, we explored many alternative strategies and he eventually decided on a 401(k) plan with a safe harbor match. As a 3(38) advisor, we guided the investment choices employees could make and found an effective and low cost third-party administrator. In 401(k) plans, costs are one essential consideration. It seemed that for Phil the most exciting part of the process was the enrollment meeting with all of the employees gathered in the conference room. To his and our delight, they were fully engaged and inquisitive. By the end of the day, the employees thanked Phil and there was palpable energy in the air. While not every experience is so uplifting, on this particular day, every employee enrolled in the new 401(k) plan.
The plan’s web portal provides an easy and effective way for employees to keep track of their savings. Historical data is simple to find and employees have access to see how their funds are accumulating. Later on, this experience even prompted Phil to ask us about instituting a profit-sharing component.
*Some details have been changed to preserve client privacy.