401k Retirement Plans --Investment Options, Recordkeeper and Broker of Record

When you decide to evaluate various 401k retirement plans, you must choose a Plan Administrator. A Plan Administrator is someone who oversees the operation of the 401k. In small organizations, it is the business owner, in larger ones it is someone in the Human Resources department.When it comes to choosing a 401k retirement plan, you need to consider three key components: Investment Options, Record keeper, and Broker of Record.

The Record-keeper

The Record keeper administers either Traditional 401k plans or Safe Harbor 401k Plans. The Record keeper does all the accounting, participant reporting, testing, and usually files 5500 reports with the IRS.

Investment Options

Various fund families or groups of mutual funds are the "menu" that your employees will be able to choose from.

Broker of Record

In addition to the Investment Options and Record-keeper, you may also opt for a Broker of Record. A Broker of Record is a licensed investment adviser who can help your Plan Administrator to enroll your employees in the Plan. When choosing a broker, you should seek out one who will also provide the employees with information on their 401k plan to help advise them about where their money should be invested. They will provide details about any fund families available in the plan, and a detailed analysis of the benefits and risks associated with each one.

The Broker of Record can meet with employees annually to give them current information on 401k plans and any new benefits or options they may have available. Employees can be advised of any 401k employer match available to them, and how best to create a plan for retirement savings. He can also be available for employees to call on an as-needed basis.

Unfortunately, many business owners have no idea what they are paying for their 401k plans for small business; they believe that they are paying a lot less than they actually are.