Frequently Asked Questions

Offering your employees a 401(k) plan helps recruitment, enhances morale since there is a good savings plan in place, and employees receive considerable tax savings per year. Also, any employer contributions are deductible on the employer’s federal income tax return.  

Employee 401(k) contributions for plan year 2024 will top off at $23,000 with an additional $7,500 catch-up contribution allowed for those turning age 50 or older.

We can set up a new plan that does not have any assets in about 2 weeks or less depending upon the 401(k) providers that you choose. An existing plan with assets will take about 4 to 6 weeks.

Larger plans usually have lower expenses than smaller plans attributed to more assets and participants.  According to recent data published from the 401(k) Book of Averages, a company with 2,000 employees can expect to see an average 0.78% total expense ratio. In comparison, small businesses plans with 50 employees have an average expense ratio of 1.26%. At 25 employees, it’s 1.35%.  Transparent 401K’s 401(k) plans are very cost-effective since we negotiate 401(k) plan expenses with various 401(k) providers and offer institutional low-cost active and index funds.

The current average expense ratio for actively managed mutual funds is between 0.5% and 1.0% and typically goes no higher than 2.5%, For passive index funds, the typical ratio is closer to 0.2% but can be as low as 0.02% or less in some cases. Transparent 401K uses institutional funds that have the lowest expense ratios for both index and actively managed funds.

Your retirement money is kept with a custodian, independent from your employer. Some custodians that we work with include Matrix Trust, TD Ameritrade Trust, and Charles Schwab.

A Safe Harbor 401(k) plan generally satisfies the non-discrimination rules for elective deferrals and employer matching contributions. For a 401(k) plan to be considered a Safe Harbor plan, employers must satisfy certain contribution, vesting, and notice requirements.

We have a lot of new start-up plans that do not currently match. In order to help them pass the required non-discrimination testing at the end of the year, we encourage automatic entries, training employees on the benefits of joining the 401(k) plan, and often limiting the highly compensated group to the top 20%.  

Transparent 401K is a Registered Investment Advisory Firm and offers Third-Party Administration and record keeping services though various 401(k) providers that we recommend. Many of our partners have been in business for over 50 years or more and administer thousands of plans.