Employer Sponsored Retirement Plans
Build a Retirement Plan That Works for Your People—and Your Business
A well-designed retirement plan can strengthen your compensation strategy, help employees prepare for the future and give owners a more structured way to save. It can also become expensive, confusing and administratively demanding when the plan design, service providers, payroll systems and employee communication are not working together.
Axcess Financial Group helps employers evaluate, establish and improve retirement plans around the realities of their business. We bring plan design, provider coordination, employee education and ongoing review into one organized strategy.
A Retirement Plan Is More Than an Investment Account
An employer-sponsored retirement plan is a system involving your plan document, payroll, recordkeeper, third-party administrator, investment options, service providers and employees. A decision in one area can create costs or responsibilities somewhere else.
That is why the process should begin with your business—not with a prepackaged product.
Retirement Plan Options
No two employers have the same workforce, entity structure, cash flow or owner objectives. The right plan depends on what the business is trying to accomplish.
401(k) and Profit-Sharing Plans
A 401(k) plan allows eligible employees to direct a portion of their compensation into individual retirement accounts under the plan. Depending on the design, the employer may also make matching, nonelective or profit-sharing contributions.
A profit-sharing feature can give the employer flexibility in determining whether and how much to contribute in a particular year, subject to the plan document, applicable limits and nondiscrimination rules. Despite the name, an employer does not necessarily need to have profits in order to make a profit-sharing contribution.
Plan-design decisions may include:
- Traditional and Roth employee contributions
- Employer matching contributions
- Nonelective employer contributions
- Profit-sharing allocations
- Safe Harbor provisions
- Automatic enrollment and automatic escalation
- Eligibility and vesting schedules
- Loan and hardship-withdrawal provisions
- Investment-selection and participant-support services
The right combination depends on what the business is trying to accomplish. A plan built primarily to support recruiting may look different from one designed to help retain senior employees, reward long-term service or increase retirement contributions for owners.
403(b) Plans
A 403(b) plan is available to public schools, certain tax-exempt organizations under Internal Revenue Code Section 501(c)(3), and certain ministers. Employees can contribute through payroll, and the eligible employer may also contribute.
For nonprofit organizations, plan design still requires careful attention to eligibility, payroll, investment arrangements, employee communication and administrative responsibilities. A 403(b) should not be treated as a hands-off plan simply because it serves a tax-exempt organization.
SIMPLE IRA Plans
A SIMPLE IRA can provide a relatively straightforward retirement-savings option for an eligible small employer. Employees make salary-reduction contributions to their individual SIMPLE IRAs, and the employer is required to make matching or nonelective contributions under the applicable rules.
SIMPLE IRAs are generally intended for employers with 100 or fewer employees who earned at least the applicable compensation threshold in the preceding year and who do not maintain another qualified retirement plan, subject to limited exceptions.
A SIMPLE IRA may offer lower startup and operating complexity than a conventional 401(k), but it also provides less flexibility in areas such as contribution formulas, eligibility and vesting.
SEP Plans
A Simplified Employee Pension, or SEP, allows an employer to make retirement contributions to SEP-IRAs established for eligible employees and business owners. Employees generally do not make salary-deferral contributions to a SEP.
A SEP can be attractive to a self-employed individual or business seeking straightforward administration and flexibility over whether to contribute from year to year. When the employer does contribute, the contribution must follow the plan’s allocation rules for eligible participants.
A SEP and a SIMPLE IRA are separate types of plans. They should be evaluated separately rather than presented as two names for the same arrangement.
Executive Compensation Plans
Qualified retirement plans are subject to contribution, compensation, participation and nondiscrimination limits. Those limits may prevent a standard plan from fully addressing the retention or retirement-income goals of certain owners and key executives.
Nonqualified deferred compensation and other executive benefit arrangements may be used to supplement a broad-based qualified plan. These arrangements can be designed around selected employees, but they do not receive all of the same tax advantages and protections as qualified plans and must be structured carefully under rules that include Internal Revenue Code Section 409A.
Executive compensation planning should be coordinated with the employer’s attorney, CPA and other appropriate professionals.
Tax Credits for New Retirement Plans
Starting a Plan May Cost Less Than You Expect
Eligible small employers may be able to claim federal tax credits for establishing and administering a new retirement plan and educating employees about it.
Startup Cost Credit
An eligible employer may qualify for a credit of up to $5,000 per year for three years for qualified startup costs associated with a SEP, SIMPLE IRA or qualified plan such as a 401(k).
For employers with 1 to 50 employees, the credit can equal 100% of qualified startup costs, subject to the statutory calculation and annual limit. For employers with 51 to 100 employees, the percentage is generally 50%, again subject to the applicable limit and eligibility requirements.
Employer Contribution Credit
Certain eligible employers may also qualify for a separate credit based on qualifying employer contributions made for eligible employees during the first several years of a new plan.
The amount depends on the employer’s size, the plan year, employee compensation and the amount contributed.
Automatic Enrollment Credit
An eligible small employer that adds a qualifying automatic-enrollment feature to a new or existing plan may be able to claim a credit of $500 per year for three years.
These credits are not automatic. Employee count, prior plan history, eligible expenses, plan features and other requirements affect qualification. Your tax professional should determine which credits are available and how they affect any related business deductions.
Six Questions Every Plan Sponsor Should Be Able to Answer
These are the questions that separate a plan that simply exists from one that is genuinely working.
1. Who Is Responsible for Each Part of the Plan?
Retirement plans involve a number of different roles. Depending on the arrangement, those roles may include the employer or plan sponsor, named fiduciaries, trustees, a recordkeeper, a third-party administrator, an investment professional, payroll providers and other service providers.
Some plans appoint an ERISA Section 3(38) investment manager or a Section 3(16) administrative fiduciary to assume specified discretionary responsibilities. Delegating particular duties can reduce the employer’s direct workload and exposure in those areas, but it does not remove the employer’s responsibility to prudently select and monitor its providers.
The Department of Labor treats the selection of a plan service provider as a fiduciary function and recommends documenting both the selection process and ongoing monitoring.
We help employers understand who is doing what, where responsibilities overlap and where important work may be falling through the cracks.
2. What Are the Plan’s Total Costs?
A low headline price does not necessarily mean a plan is inexpensive.
Total costs can include:
- Recordkeeping fees
- Third-party administration expenses
- Advisory or investment-management fees
- Custodial or trustee expenses
- Participant-level account charges
- Investment expense ratios
- Audit or legal costs, when applicable
- Payroll-integration or technology expenses
Fees should be evaluated in relation to the services, investments and support the plan receives—not viewed as isolated numbers. Regular review can help the employer determine whether costs remain reasonable and whether participants are receiving appropriate value.
The Department of Labor identifies understanding and evaluating plan fees as an important part of a sponsor’s fiduciary responsibilities.
3. How Much Work Will the Plan Create for HR and Payroll?
A retirement plan should not depend on repeated spreadsheets, duplicate data entry and last-minute corrections.
Where supported by the selected payroll and recordkeeping systems, integration can automate or simplify the transfer of information such as employee eligibility, compensation, employee deferral elections, employer contributions, loan repayments and employment-status changes.
Integration can substantially reduce manual work, but it does not eliminate the employer’s responsibility to review payroll deductions, transmit contributions promptly, maintain accurate census information and monitor the plan’s operation.
We evaluate the administrative workflow before implementation so the business understands what will be automated, what will remain internal and who will address exceptions.
4. Will Employees Actually Use the Plan?
Offering a plan and achieving meaningful participation are not the same thing.
Automatic enrollment can help increase participation by enrolling eligible employees unless they affirmatively opt out or choose another contribution rate. Automatic escalation can gradually increase employee contribution rates over time. Matching contributions and clear employee education may provide additional motivation to participate.
The best design will still underperform when employees do not understand it. Enrollment communication should clearly explain:
- Why the plan is being offered
- How payroll contributions work
- How to receive the full employer match, when applicable
- What investment support is available
- What fees participants pay
- Where to go with questions
5. Does the Plan Support Both Workforce and Leadership Goals?
Traditional 401(k) plans may be required to complete annual nondiscrimination testing to compare contributions made by highly compensated and non-highly compensated employees.
A properly designed Safe Harbor 401(k) may satisfy certain Actual Deferral Percentage and Actual Contribution Percentage testing requirements through specified employer contributions and other plan provisions. Safe Harbor status does not eliminate all compliance requirements, annual contribution limits, coverage rules or every form of testing.
The right design should be evaluated in the context of:
- Employee participation patterns
- Owner and executive contribution goals
- Employer contribution budget
- Workforce compensation
- Turnover
- Vesting objectives
- Long-term plan sustainability
6. Who Keeps the Process Moving?
The plan sponsor should not have to coordinate every provider without support.
Axcess Financial Group helps bring together the plan sponsor, recordkeeper, third-party administrator, payroll provider and other professionals. The goal is to give leadership a clearer view of the plan while giving employees a consistent place to begin when they need help.
Axcess’s team includes professionals holding the Certified Plan Fiduciary Advisor, or CPFA®, designation, and its current areas of expertise include retirement plan education, strategic employee benefit plan design and corporate benefits compliance.
A Plan Employees Can Actually Understand
Employees generally do not begin with technical questions about ERISA, recordkeeping or nondiscrimination testing. They begin with practical questions.
Axcess helps employers communicate the answers in straightforward language during enrollment and throughout the year. Education should not end after an employee selects a contribution rate. Employees need ongoing support as their income, family situation and retirement goals change.
How do I receive the full company match?
Employees need to understand the contribution rate required to receive the entire available match, along with any eligibility or vesting provisions.
How should I approach the investment options?
Employees should understand the available investment categories, risk, time horizon, diversification, fees and any target-date or managed-account options available through the plan.
What am I paying?
Participants should be able to identify the administrative and investment expenses charged to their accounts and understand where to find the required disclosures.
When can I access the money?
Retirement-plan assets are subject to plan rules and federal tax requirements. Loans, hardship withdrawals and other distributions may or may not be available, and taxes or penalties may apply.
What happens if I change jobs?
Depending on the plan and the participant’s circumstances, options may include keeping the account in the existing plan, moving it to another employer’s plan, completing a rollover to an IRA or taking a taxable distribution.
Our Process
STEP 1
Understand the Business
We review your ownership structure, workforce, payroll, current benefits, budget, recruiting concerns and retirement-plan objectives.
STEP 2
Evaluate the Available Plan Designs
We compare appropriate structures and explain the differences in employer cost, employee contribution opportunities, administration, flexibility and compliance.
STEP 3
Coordinate the Providers
We help define the responsibilities of the recordkeeper, third-party administrator, payroll provider, investment professionals and internal staff.
STEP 4
Implement and Educate
We help move the plan from a document to a working employee benefit through payroll coordination, enrollment support and understandable communication.
STEP 5
Monitor and Adapt
We review how the plan is functioning and identify where design, service, pricing or employee education may need to change.
Frequently Asked Questions
Which retirement plan is right for our business?
The right structure depends on your number and type of employees, business entity, cash flow, employer contribution budget, owner objectives and desired level of flexibility.
A SIMPLE IRA or SEP may work for an employer that prioritizes streamlined administration. A 401(k) and profit-sharing plan may offer more flexibility for employee deferrals, employer contributions, vesting and plan design. Eligible nonprofit organizations and public schools may consider a 403(b).
The decision should be based on the complete business situation rather than the plan with the lowest initial price.
Are we required to make an employer contribution?
It depends on the plan.
A traditional 401(k) may permit discretionary matching, nonelective or profit-sharing contributions. A Safe Harbor 401(k) requires the employer contributions specified by the selected Safe Harbor design. A SIMPLE IRA requires an employer matching or nonelective contribution. A SEP is funded through employer contributions rather than employee salary deferrals.
Can we eliminate our fiduciary liability by hiring outside providers?
No.
An employer may assign specified investment or administrative discretion to qualified fiduciaries, but hiring a provider does not eliminate the responsibility to select the provider prudently, understand the services and fees, and monitor performance.
Clear delegation, documented processes and regular review can help manage fiduciary risk. Claims that an outside provider completely “shields” the employer or leadership team from ERISA liability are too broad.
Does a Safe Harbor plan allow owners to contribute without restriction?
No.
A plan that meets the applicable Safe Harbor requirements may avoid certain ADP and ACP nondiscrimination testing that applies to a traditional 401(k). Owners and highly compensated employees remain subject to annual contribution limits, compensation limits, plan terms and other applicable qualification requirements.
Are new 401(k) plans required to use automatic enrollment?
Many newer 401(k) and 403(b) plans are subject to SECURE 2.0 automatic-enrollment requirements for plan years beginning after 2024. The federal rule generally applies to plans established on or after December 29, 2022, but contains exceptions for certain small or newly established businesses, governmental plans, church plans and some other arrangements.
Whether a particular employer or plan qualifies for an exception should be confirmed with the plan administrator or legal and tax professionals.
Can payroll integration remove all of the administrative work?
No, but effective integration can reduce duplicate entry and routine errors.
The employer still needs a process for reviewing eligibility, deductions, contribution deposits, compensation, employment changes and provider reports. The goal is to reduce unnecessary manual work—not to pretend the plan can operate without employer oversight.
Could we qualify for retirement-plan tax credits?
Possibly.
Eligible small employers may qualify for credits related to qualified startup costs, certain employer contributions and automatic enrollment. The startup-cost credit can be available for up to three years, and the automatic-enrollment credit can be available at $500 per year for three years.
Qualification depends on factors that include employee count, compensation, prior retirement-plan coverage, eligible costs and the plan’s effective date. Your CPA or tax professional should verify the available credit before it is included in a budget.
We already have a plan. What should a review cover?
A meaningful review should look beyond investment performance. It may include:
- Plan goals and current design
- Participation and employee contribution rates
- Employer matching or profit-sharing formulas
- Eligibility and vesting provisions
- Nondiscrimination-testing results
- Recordkeeping and administrative services
- Total plan and participant costs
- Investment options and review procedures
- Payroll integration
- Employee communication
- Service-provider responsibilities
- Fiduciary documentation
The review should identify what is working, where risk or unnecessary cost may exist and whether the plan still reflects the business’s current workforce and objectives.
Can we provide additional retirement benefits to selected executives?
Potentially.
Nonqualified deferred compensation, executive bonus arrangements and other strategies may supplement the broad-based retirement plan. These arrangements carry distinct tax, legal, funding and documentation considerations and should be coordinated with experienced legal and tax professionals.
Start With a Better Retirement Plan Conversation
Whether you are establishing your first plan or questioning whether your existing plan is still competitive, the process should begin with a clear understanding of the business.
Bring us your current plan documents, provider agreements, fee disclosures, employee census or simply the goals you are trying to accomplish. We will help you evaluate the available options and organize the next steps.
Call Axcess Financial Group at 505-872-4900 or use the contact form to begin.