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100 WAYS: #11 Scale Back Retirement Plan Contributions
– December 22, 2010
Many companies are starting to revisit their approach towards retirement plans. The older model of employers making significant retirement plan contributions on behalf of their employees can have a negative cash flow effect. Consider implementing a program that ties all contributions to the profitability of your company.
In addition, if you don’t have one, consider starting a 401(k) plan. This is a great way to assist your employees in being fiscally responsible. You are telling your employees that you will participate in funding their retirement if they bear part of the financial responsibility. Here are four simple ways to control the costs of administering your plans:
- Bundle services into one service provider
- Reduce company matching contributions
- Offer a limited number of asset categories as investment options and use passively managed index funds
- Carefully review the pros and cons of luxury 401(k) plan options, such as daily transfers, and their effect on returns
Once a 401(k) plan is established it is important to aggressively recruit and retain plan participants so that your company doesn’t run afoul with IRS regulations against “top heavy” executive skewed plans.
HMV can assist you in reviewing your current retirement plans or help you in establishing a new plan.
This is Profit Enhancement Idea #11 in Heard, McElroy & Vestal's 100 Ways: The Profit Enhancement Process series. The purpose of the series is to assist business owners and managers in cutting costs and increasing revenues by working smarter, not harder.
Walker Coburn
318.429.2109
wcoburn@hmvcpa.com
Walker is an Audit Manager in our Shreveport office. He received his Bachelor of Administration in Accounting and a Masters of Accountancy from Millsaps College in Jackson, MS. Prior to returning to his hometown of Shreveport and joining Heard, McElroy & Vestal, Walker worked for KPMG in Jackson and Memphis, and more recently as a financial reporting advisor for FedEx Corporate.
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