A 401(k) is an employer-sponsored retirement savings plan. It allows employees to contribute on a tax-deferred or after-tax basis while also giving an employer the option to contribute, such as matching and profit sharing contributions. Any taxes due generally aren’t paid until the money is withdrawn from the 401(k) account.
How does a 401(k) plan work?
The employee elects the 401(k) payroll contribution amount and how to invest it based on the investment options the employer has selected to offer. Most plans offer a spread of mutual funds composed of stocks, bonds and money market investments. Target-date funds, a combination of stocks and bonds that gradually become more conservative as the individual reaches retirement age, are another investment option.
Employer matching and profit-sharing contributions are optional in a 401(k) plan.
401(k) fees can be tricky. In many instances, fees are deducted from participant accounts and are not very transparent. There are typically two kinds of 401(k) fees: investment and plan administration expenses:
High plan fees can significantly impact an employee’s retirement savings over time.
TriNet makes retirement planning easier and more affordable by offering a multiple employer retirement plan. Offering a TriNet 401(k) plan can help you attract top-notch talent, give your company a competitive advantage and help boost employee retirement savings. Plus, TriNet 401(k) plan fees are generally much lower than the industry average.
By adopting a TriNet 401(k) plan you can help alleviate the strain of administrative, compliance and fiduciary responsibilities. TriNet handles:
The plan offers diversified investment solutions including:
This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.