Author Topic: Convincing My Boss to Offer a 401k  (Read 639 times)

kroozin

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Convincing My Boss to Offer a 401k
« on: March 12, 2019, 08:50:38 AM »
I've been working at my current company for almost 5 years now. When I started we were essentially a startup, but we've grown pretty significantly since then. In the past my boss has been hesitant about offering a 401k (it took me 4 years-ish to convince them to offer health insurance), but I really want to give another go at trying to convince him.

The only issue is I'm not even really sure what I should be researching. I understand the benefit for employees, but should I be looking for a financial professional to come in and give a presentation? Are there options that I should look into and present to him myself? My only experience with something like this was my last job where they had a financial planner come in and walk us through all of our options.

Also, assuming that my boss opts not to offer a 401k, am I just out of luck on that front? I have an HSA and an IRA, but everything I read is telling me I should be maxing a 401k next.

MDM

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kroozin

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Re: Convincing My Boss to Offer a 401k
« Reply #2 on: March 12, 2019, 11:19:13 AM »
MDM to the rescue once again....thank you!

Update: Follow up after reading those: How do I go about researching Third Party Administrators? In the past my employer has just provided one, and the only one I've worked with personally is Northwestern, who I'm gathering isn't a great option. I tried googling "401k third party administrators" but I just get ads for Fidelity and a bunch of articles explaining what a TPA is.

Is there something specific I can search for locally to get a good look around?
« Last Edit: March 12, 2019, 12:56:39 PM by kroozin »

MDM

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bwall

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Re: Convincing My Boss to Offer a 401k
« Reply #4 on: March 12, 2019, 02:12:32 PM »
My payroll provider offered to provide a 401k plan. They charged $150/month plus $25 per enrollee. Which, for a small company with five employees is ridiculously expensive. If you have 20-30 enrollees or more, these amounts might be more reasonable.

So, my first look would be to the payroll provider. Call them and see what they say.

kroozin

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Re: Convincing My Boss to Offer a 401k
« Reply #5 on: March 12, 2019, 02:20:57 PM »
Embarrassing update: It turns out my company already has a 401k plan, they just don't match and it wasn't communicated very well. I hadn't asked directly because they'd be resistant in the past and I wanted to be fully prepared first...Sigh, sorry for wasting your time, but appreciate the help! I at least learned something from those articles :)

chasesfish

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Re: Convincing My Boss to Offer a 401k
« Reply #6 on: March 12, 2019, 03:16:32 PM »
I hope you get going on it, put the maximum in and let it ride

marbar

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Re: Convincing My Boss to Offer a 401k
« Reply #7 on: March 12, 2019, 03:42:18 PM »
Embarrassing update: It turns out my company already has a 401k plan, they just don't match and it wasn't communicated very well. I hadn't asked directly because they'd be resistant in the past and I wanted to be fully prepared first...Sigh, sorry for wasting your time, but appreciate the help! I at least learned something from those articles :)

That is quite unfortunate. Do know that your company has a legal responsibility to distribute information about the 401(k) within 90 days of the date you become eligible.

kroozin

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Re: Convincing My Boss to Offer a 401k
« Reply #8 on: March 12, 2019, 08:24:15 PM »
That is quite unfortunate. Do know that your company has a legal responsibility to distribute information about the 401(k) within 90 days of the date you become eligible.

Yeah, apparently they did notify us once, lumped in with our Health Insurance info and I (and, it turns out, at least 3 other employees) missed it.


I hope you get going on it, put the maximum in and let it ride

The funny thing is, now that I'm looking deeper at it, I think it might make more sense to pay off some debt (remove PMI on my house, pay Student Loans), before I start maxing it. But I'm still running the numbers to see which way nets the most in the long run

MDM

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Re: Convincing My Boss to Offer a 401k
« Reply #9 on: March 12, 2019, 09:43:23 PM »
...running the numbers to see which way nets the most in the long run
The answer you get will (or should) depend on what you assume for the rate of return on your investments.

kroozin

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Re: Convincing My Boss to Offer a 401k
« Reply #10 on: March 12, 2019, 09:57:56 PM »
The answer you get will (or should) depend on what you assume for the rate of return on your investments.

Very true. I've been using a 7% expected return, but I realized I wasn't taking some things into account, like the fact that the 401k contributions are pre-tax, and that there is a maximum that I can contribute. That, combined with separating my 401k from my IRA and HSA make this a very difficult thing to nail down! (I've been assuming 7% returns on the HSA/IRA as well)

As I get more frustrated trying to do the math, I'm tempted to simply stick to the "Investment Order" suggestion in this forum. It may not be tailored to my situation specifically, but it makes sense to me to focus on expected 7% returns and leave the ~4% interest loans on minimum payments.

MustacheAndaHalf

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Re: Convincing My Boss to Offer a 401k
« Reply #11 on: March 13, 2019, 04:12:42 AM »
Be careful with very small company 401(k) plans.  It's very likely your company did not pay attention to expense ratios within the 401(k) plan.  Most of the people complaining about really bad choices tend to be smaller companies with newer plans.

I'd highly recommend taking some of the fund names in your plan, and doing a Google search where you append "Morningstar" to the search.  If they list "Voya Growth", you search for "Voya Growth Morningstar" and view morningstar's data about it.  You should see an "expense ratio" or "fee" near the upper right side.  If it's 0.25% or lower, it's good.  If it's near 1.00%, not good at all.  (Voya and American Funds tend to have bad expense ratios)

If you don't invest, or only need to invest a few thousand, an IRA might be a better option.  You can choose where you open an IRA, and pick your investments.  Vanguard, Fidelity and Schwab are all good choices for that - but again, pay attention to expense ratios.  That's how much of your money the fund consumes every year, so it's important.

kroozin

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Re: Convincing My Boss to Offer a 401k
« Reply #12 on: March 13, 2019, 08:53:22 AM »
Yeah I was looking into the details of the plan last night. One of the funds offered is VFIAX, with an expense ratio of 0.04%, which seems right (and also matches when I do that Morningstar search). There is also an "Advisor Fee" of 0.07% that I've sent an email about asking if is paid by us or the employer.

I'm maxing my HSA and IRA already as well, so this is on top of that. That Morningstar trick is good to know though, thanks for the tip!

MustacheAndaHalf

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Re: Convincing My Boss to Offer a 401k
« Reply #13 on: March 13, 2019, 10:58:08 AM »
Does that 401(k) plan also offer VTSAX?  (Vanguard Total Stock Market, Admiral shares)

If so, I wouldn't worry about the 0.07% adviser fee.  Just make sure it's not "0.70%", but 0.07%.  If you have Vanguard funds within your 401(k), and a low 0.07% adviser fee, it sounds like you have a good 401(k) plan.  Well, except no matching.

But you should consider investing in that 401(k) plan.  The choice you mention is decent, and the adviser fee lower than most plans which charge one.