The Top Questions You Need to Know Regarding Your 401(k)

September 10, 2020

The Top Questions You Need to Know Regarding Your 401(k)

We all dream of the day we can finally say we are retired! Preparing for retirement starts today! Are you prepared?

On September 11, we will celebrate National 401(k) day! We at SMA Services, Inc., want to be sure and share some of our expertise into the world of retirement. Each day we will be sharing new tips with you to help in securing the most from your current 401(k) plan.

Don't have a plan? No worries. We will also be sharing tips on how to start a 401(k) and the basic knowledge one needs to do so. Come back each day to see the next set of tips!

SMA Services TPA/401(k) SMA Services IRA

Reasons Why Employers use a TPA for their 401(k) Plan:

Qualified retirement plans offered by employers, like 401(k), are all required to adhere to IRS/DOL regulations to maintain compliance each year.  Many employers will appoint a third-party entity, better known as a third party administrator(TPA) to perform these duties.  Let's look at reasons employers outsource this work.
  • Assistance in running many day-to-day aspects of your retirement plan.
  • Expertise in:
    • Customized plan design;
    • Preparing annual tax returns and required discrimination testing and reporting.
  • Works as a liaison between the plan Record-keeper, plan advisor, and the employer.
  • Ensures the plan is in compliance with all the IRS/DOL requirements.
  • Service and responsiveness accountability since the TPA is independant of the plan Record-keeper.

Advantages of Saving for Retirement in an IRA:

An Individual Retirement Account(IRA) is a tax friendly retirement savings account. IRA's essentially function as a personal 401k that you open and operate yourself. If your employer does not offer a retirement plan or if you are self employed, an IRA is a smart place to save.

  • Tax benefits- Potential deduction opportunity on tax return for contributions.
  • Growth - Your investment grows tax deferred.
  • IRA's are better for long term savings you intend to use for retirement.
  • All types of individual retirement accounts, or IRA's, recognized under the federal tax code enjoy substantial protection from creditors during bankruptcy.
  • Roth IRA - Some individuals can qualify for a Roth IRA where you pay taxes on money going into your account and then all future withdrawals are tax free.
  • Custodial Roth IRA - An adult can open this type of account for a child under 18 who has earned income.

Tips if Starting a 401(k) Plan For Your Business:

A 401(k) retirement plan is an awesome benefit that can do some great things for your business and your employees. Starting a 401(k) for your business is easier than you think.  So if you are considering setting up a 401(k) plan for your business, here are some helpful tips to get started.

  • The IRS gives tax credits for employers starting a plan so be aware of the benefits.
  • Find a good TPA as a starting point to understand plan design, plan type, plan documents, compliance requirements, fees, Recordkeeper options and other items to consider.
  • Decide on an experienced financial advisor with 401(k) background.
  • Understand the benefits of starting a plan for both employee and employer.
  • If you are self employed, there are many plan options other than 401k that could be more suitable.

Top Ideas for Smart Saving into 401(k) Plan:

More than half of Americans feel they aren't saving enough for retirement. Since your company sponsored 401(k) plan is arguably the best place to save for retirement, let's look at some ideas to help you get on track.

  • Start saving early - use the power of compounding interest to your advantage.
  • Diversify by investment selections - "don't put all your eggs in one basket."
  • Payroll deduct the maximum savings up to your employer match.
  • More savings is better if you have a goal of at least 10% of income toward this.
  • Look for opportunities to increase savings over time.  One idea is to auto escalate your deferral percentage 1% a year until reaching the desired goal.
  • Ask if Roth 401(k) deferrals are available in your plan
  • Don't forget to roll over.If you leave your job, you can transfer your account to an IRA or your new employers 401(k) if they offer one.

Vice President
SMA Services Inc.
Mark Massey
[email protected]
(800) 423-4992 ext. 211

Director of Retirement Plan Development
Rob Masson
[email protected]
(985) 778-1980

Director of
Compliance Services

Betsy Schaaf, J.D.
[email protected]
(800) 423-4992 ext. 125

Why Partner with SMA Services, Inc.?

SMA Services, Inc. is one of the top Third Party Administrators (TPA) in the south with competitive pricing and outstanding customer service.  Our primary business is retirement plan administration and we are committed to providing you with the resources you need to effectively select, manage, and monitor your retirement plan.

When you partner with SMA Services, Inc., you are actually treated like a partner, not a nameless, faceless, customer, or a number.

You gain a trusted expert focusing on meeting your unique retirement goals. A company able to provide all the tools and resources needed to ensure success. And of course, our exceptional customer service.

SMA Services TPA/401(k) SMA Services IRA

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