70% of Americans are behind schedule on retirement savings.
The Retirement Landscape
Right now, 92% of American’s fall short on retirement savings. As fee-only fiduciary advisors, we sit on the same side of the the legal table as plan sponsors, providing sound investment advice. We listen to plan sponsors and understand their challenges.
60% of households have less than $25,000 in savings and investments right now.
40% of retirement plans offer auto enrollment, but only 3% use it on average.
80% of full time workers have access to employer sponsored retirement plans.
Best-In-Class 401(k) Advisory Services
Planning for retirement requires action, but it’s hard to know where to start. Our 401(k) financial advisors in Salt Lake County, Utah and Boise, Idaho can help guide you through the task of setting up the most common kind of defined contribution retirement plan — a 401(k).
What is a 401(k)?
A 401(k) is a retirement savings plan. This plan is sponsored by an employer and allows employees to invest a portion of their paycheck into various accounts for savings and growth.
Here’s how it works: An employer and their employees decide how much will be contributed, and the employer deposits pre-taxed money into their employees’ 401(k) accounts on their behalf. Some companies offer 401(k) contributions on an after-tax basis — these funds are called Roth 401(k)s.
This type of investment happens through payroll deduction, a process by which employees decide on a percentage of their salary to contribute to their 401(k). From the moment that this percentage is agreed upon, it is deducted automatically from each employee’s paycheck. As a result, the paycheck is reduced but now has some additional tax benefits.
The Benefits of Having a 401(k)
Aside from the apparent fact that saving for retirement is beneficial in and of itself, investing in a 401(k) has many benefits, including:
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Contribution match funds from your employer
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Nearly every 401(k) plan offers matching funds from employers. The most popular contribution match is 3% of an employee’s annual salary. That means if you make $60,000 a year, and you contribute 3% (or $1,800), your employer will also invest $1,800, making your overall yearly growth is right around $3,600, depending on the growth of your portfolio.
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Controlling how your money is invested
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When you’re arranging your 401(k) portfolio, you can control how your money is invested. Most 401(k) plans are made of mutual funds that are comprised of bonds, stocks, or money market accounts. While there is often a perception that these types of accounts can be volatile, 401(k)s are usually distributed into funds that are increasingly conservative as they age.
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Having a dedicated administrator or management company
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Many employers hire a management company for investment administration services. These companies will update investors on the performance of their 401(k), inform them on plan updates, manage paperwork, and assist with account changes.
Other types of 401K Plans
There are many types of 401(k) plans and plan providers. Two of the most common plans our 401(k) financial advisors assist with are:
Safe Harbor 401K Plan
A ‘Safe Harbor’ plan is a common 401(k) retirement plan for businesses with many employees and is offered by many different plan providers. Safe Harbor plans ease the process for business owners to maximize contributions to their own individual accounts while minimizing some of the limitations associated with adhering to IRS non-discrimination testing.
Owner Only 401K Plan
An owner-only 401(k) plan is designed for self-employed individuals with no additional employees, excepting a spouse.
Your 401(k) Financial Advisors
The 401(k) financial advisors at TrueNorth Retirement Services will help you build a better retirement solution, in Salt Lake County, Utah and Boise, Idaho. We are dedicated to helping you prepare adequately for retirement.
Ready to get started? Contact us today!