What You Should Know When Establishing A 401(K) Plan: A Guide For New Plan Sponsors

Setting up a new 401(k) plan seems like it should be simple. Many companies offer a 401(k) plan to their employees, and prospective plan sponsors appear to have a substantial variety of vendors to choose from, ranging from large financial institutions that have served the qualified retirement plan market for years to newer, less expensive online services. However, a company that wishes to set up a new 401(k) plan should be aware that there are many pitfalls to be aware of. Obtaining a correctly drafted document that reflects the plan sponsor's design, and then successfully operating the plan in compliance with that document, are complicated processes. Inadvertent errors by the plan sponsor in both stages are quite common.