Employee Investment Selection (Part 2)

by Bruce Fenton, Managing Director of Atlantic Financial

Companies in the technical sector will certainly find Internet access to their 401k a large plus, if not a necessity. The more technical your company and the more often your employees use the Internet, the more Internet based services your 401k provider should offer. Such services should include daily account access and the ability to make transfers and transactions online. Again, this will save the employer time involved with employer education and administration functions.

Another important aspect of plan setup to consider is selection of investment choices. Many plans that are cost effective for small growing companies are offered through mutual fund companies that are not known for outstanding performance. If your employees are particularly conscious about investment choices they will be more demanding about the quality of the investment selections within the plan. Unfortunately, many of the largest and most popular mutual fund companies such as Fidelity, Putnam and Vanguard require employee participation or dollar amount balance minimums that can make opening a plan prohibitive for a small company. Certain investment firms have alliances with many large fund companies that allow waivers of the minimum number of employees and dollar amounts, thus making these types of well-known mutual fund plans available to smaller companies.

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401k Plan | 401k Plan Services | 401k Plan Investment Options | 401k Plan Setup

Another type of 401k plan that is gaining popularity in recent years is one that combines many mutual fund companies in one plan. In some cases, these multiple fund choices can be brought together with additional options to purchase stocks, bonds and CDs. This type of plan is popular due to the obvious benefits of having vast diversification ability within the account. These plans also aid entrepreneurs in complying with certain legal considerations relating to the provision of suitable investments. A plan with thousands of options is likely to comply with legal requirements that call for diversification. Employers wishing to use a multiple option plan are well advised to use one that is offered by a mutual fund company or 401k provider. It is not recommended that an employer try to create such a plan on their own, as they will find themselves soon inundated with multiple statements and forms from numerous fund companies and brokerage houses and an administration nightmare.

Contact Bruce Fenton and Atlantic Financial, Inc

Bruce Fenton is the Managing Director of Atlantic Financial, Inc. 

If you would like Atlantic Financial to assist you with your corporate 401k plan or answer any questions you may have, please call Atlantic Financial at 1-800-559-2900, (please be sure to include your name and phone number in your email), or use this form to contact us:

Back to beginning of the Part II: 401k Plan Features - Employee Investment Selection