When to Call a Third Party Pension Plan Administrator?

Administering pension plans is not an easy task for companies, especially small businesses with limited administrative capacity. It’s a complicated task, full of legal issues and financial calculations that can make the entire process confusing.

For this reason, many companies choose to use a third-party pension plan administrator. The purpose of the service is to provide you with a foolproof way to manage employee pension plans without the steep learning curve. You specify the benefits you’d like your employees to receive, and then the administrator does all the busy work for you, allowing you to get on with running your business.

But when should you call a third-party pension plan administrator and use their services? Take a look at the following scenarios.

You Want To Enroll Your Employees On A 401(k) Scheme


401(k) pension plans allow your employees to put money into their pension plans today and defer taxes in the future. So, for instance, if you pay your employee $50,000 per year and they put $10,000 into the 401(k), they only pay income tax in that year on the $40,000 that they earn. The money in the 401(k) is then free to accrue interest until they withdraw it upon retirement.

Administering and managing a 401(k) account, however, can be tricky. You have to communicate regularly with the IRS and inform them of your employee’s tax position, and you have to understand the rules. A pension plan administrator can take care of this process for you, ensure that you comply with all tax laws and that you pay your employees the correct amount of money.

You Want To Retain Talented Staff


Offering your staff a retirement plan is a great way to ensure that they remain happy and content while working for your firm. Many companies avoid offering pension plans because of the administrative costs and legal risks - something which is understandable. However, it also means that you are at a competitive disadvantage in the labor market against companies that do. In short, you could lose valuable people.

A pension plan administrator makes running a pension plan easy. You don’t need to dedicate the time or resources of your finance team - it’s all done for you by the third-party agency.

You Want To Stay Compliant


Staying compliant is always a challenge, especially in financial matters. You don’t always know how much employees can contribute to their pension pots, when they can access them, and what you’re allowed to put in as the employer.

If you’re struggling to understand the rules, then calling a third-party pension plan administrator can help enormously. With the help of professionals, you can design a pension plan for your employees and implement it in a way that is most beneficial for your company.

You Need To Develop A Pension Plan


Finally, developing a pension plan can be difficult. Laws change all the time, and government agencies do not take kindly to organizations that flout the rules. Pension plan administrators assist you in developing new plans and keep you up to date with any changes in the laws.

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