Author Topic: New Business Startup, 401k Max for the Max plan question.  (Read 288 times)

TexasRunner

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New Business Startup, 401k Max for the Max plan question.
« on: January 25, 2019, 07:16:31 AM »
All, I am working on a new business startup in a related field.  I am doing the budgeting and rate-of-return analysis and am working on salary calc's.

Two questions: 

(1) Does anybody know or have a source for typical 401k enrollment and total costs to an employer (including employer contributions)?  I need something along the lines of a whitepaper by Vanguard or a similar 401k provider to back up the numbers.  I would contact Vanguard as I plan on them being the provider, but this is still very much in the approval stage and I don't want to waste their time if this doesn't kick off.

and
(2) Anybody have input on the following 401k plan:
(FYI- Know that the business startup will be 6-8 employees MAX, hopefully generating about 30mil in annual revenue at 18%-25% finalized (actual) profit margins.  As such, part of this plan is to have the absolute best employees and compensate them extremely well...)

Matching dollar for dollar up to 8% with the following caveat:  Employer to max on a 5-Year vesting schedule if employee maximizes their 401k.  So essentially it would be 19k by employee and 37k from employer with a 5-year / 20% each year vesting schedule.  No one in the business would be making less than the 55k total max so the "or 100% of employee pay" statement shouldn't be an issue.

Obviously that would be a very generous 401k, but I am considering lowering the pay amounts slightly to adjust for it.  (No one is employed yet, business is still in the paperwork phases).  I am betting that the bank is going to want to run the numbers assuming full participation up to the maximum, so they will want to run it as if everyone gets 37k from employer into 401k.  Obviously (as a "mustachian"), I am looking to encourage efficient and high savings levels and want my employees to take full advantage of the benefit (it would also keep me from being excluded from 401k as a HCE).  What do you guys see that could backfire about such a plan?  Pay levels will already be based on business earnings (with a minimum earnings amount semi-monthly, adjusted upwards for profits).  Is there anything about this that could blow up in my face?

I would like to know before finalizing the salaries and compensation budget and showing everything to the bank, since they will probably have the same concerns.

Thanks!

TexasRunner

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Re: New Business Startup, 401k Max for the Max plan question.
« Reply #1 on: January 30, 2019, 03:01:51 PM »
Bump...

katsiki

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Re: New Business Startup, 401k Max for the Max plan question.
« Reply #2 on: January 30, 2019, 03:11:06 PM »
You may be able to get enough pricing info from here:

https://www.guideline.com/pricing

I learned of this company from MMM forums but do not have any personal experience with them.

TexasRunner

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Re: New Business Startup, 401k Max for the Max plan question.
« Reply #3 on: January 30, 2019, 03:30:48 PM »
You may be able to get enough pricing info from here:
https://www.guideline.com/pricing
I learned of this company from MMM forums but do not have any personal experience with them.

Thats pretty dang useful.  Thanks!