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4 questions every small-business owner should ask their retirement plan advisor

The right advisor can help you focus on optimizing your own retirement savings, running your business and retaining top talent.

Last updated: July 12, 2022 |

Article published: May 2, 2022

Time is a luxury for many business owners, so the effort it takes to create and offer a retirement plan can be overwhelming. But just as saving for retirement is crucial to your own financial independence, offering a retirement plan to your employees is also an important part of your overall benefits package.

That’s why Jim Marx, director of the Retirement Plans Division at Edelman Financial Engines, recommends partnering with a knowledgeable retirement plan advisor to help you make the best decision for you, your business and your employees. “It’s imperative to find an experienced retirement plan professional that will put you and your employees’ interests above all others,” said Marx. “Not simply because it’s a legal requirement but because it’s the right thing to do.”

Whether you’re just starting your search for a retirement advisor or you’ve been working with one for years, there are several questions you should ask to help ensure you are maximizing your employees’ retirement benefits, including your own.

Want to make sure your plan design and tax deductions are being utilized to their fullest extent? Contact us for a complimentary retirement plan review.

Here are four questions every small-business owner should ask their retirement plan advisor:

1. Has there been a recent assessment of my company’s retirement plan?

Regardless of how established your retirement plan is, meeting semiannually provides you with an opportunity to optimize your plan’s design and review the progress of your long-term goals. It could also help you reduce costs, improve investment options or even minimize your fiduciary obligations. Additionally, changes to your business – or changes in the law – might impact the type of plan you and your employees should utilize.

For example, states such as California, Colorado, New York, Ohio and Virginia require private-sector businesses of a certain size to offer a retirement plan. If you already offer a retirement plan, you may register for an exemption from the state retirement program. For those that do not, it’s important to understand the state’s mandated requirements and the difference between a state-run and an independent retirement plan program. Some of the state-run programs may not offer the flexibility you desire for your business.

Tip: It’s also important to ensure that you’re discussing factors like inflation risk, the sequence of return risk and the average Social Security benefit in relation to your ideal retirement age. These elements all factor into your long-term financial security.

2. Are you an independent advisor, and can you explain the current fee structure of my plan?

Transparency is critical to help ensure you are optimizing where your money goes. Independent advisors who act in a fiduciary capacity are not tied to a particular family of funds and can provide objective financial planning and investment management services based on your unique situation and financial goals. They cannot accept commissions, incentives or benefits for the products and services they recommend.

Demystifying the fee structure is a way to understand how the various financial firms within a retirement plan (advisor, record-keeper and third-party administrator) earn money from you. That said, there are many ways to structure the fees for your retirement plan. The most important thing is to understand where your money is spent for the services offered. There should never be any hidden or layered fees.

3. Can you help me maximize my individual savings rate and corporate deductions?1

For 401(k), 403(b) and certain 457 plans, the 2022 maximum contribution for individuals aged 49 and under is $20,500. If you are 50 or older, you can contribute an additional $6,5002. This is known as a catch-up contribution.

To maximize the corporate deduction for your 401(k) plan, you can contribute up to 25% of the eligible payroll amount. With a cash balance pension plan, you can increase your corporate deductions with an additional $50,000 to $300,000 per year, per targeted employee, depending on age and income levels.

Tip: The cash balance retirement plan structure gives partners, shareholders or owners the ability to build a custom savings plan based on their goals. Begin by answering this question – “How big of a check would you write to yourself each year, from your business, to fund your retirement plan?” If that number is $75,000 or greater annually, you may want to consider a cash balance plan.

4. Can you provide additional in-house wealth planning resources?

As time goes on and your circumstances change, so do your financial priorities. Financial security isn’t obtained merely by making money but by effectively managing the money you’ve made. As a business owner, there are a lot of factors that come into play, and money management may not have been something you discussed when you were younger. Yet you’re faced with important financial decisions daily, like:

A financial planner can help guide you with answers to these important questions, while helping you recognize your wealth’s potential.


You may already know us as the nation’s #1 independent financial advisory firm, as ranked by Barron’s, awarded September 2021, based on data within a 12-month period. Compensation is paid for use and distribution of this rating. We are helping more than 1 million people reach their financial goals and we are also the largest independent provider of advice to 401(k) plans – relied upon by thousands of companies (including 122 of the FORTUNE 500).3 Our dedicated team of small-business retirement experts offer Employee Retirement Income Security Act retirement plan services to business owners using the same investment methodology we currently use for individual clients – allowing business owners to let go of the burden and hassle of running their employee retirement plan – so they can focus on running their business.

1 IRS rules are complex, subject to change, and require the services of an actuarial and TPA firm to perform any of the funding calculations. Your record Keeper, actuarial and TPA (a) create plan documents; (b) perform actuarial calculations and compliance testing; and (d) prepare IRS Form 5500

2 Age 50 and older before year-end. If you participate in a 457(b) plan, the age 50+ catch-up is only available if the plan is sponsored by a governmental employer.

3 Edelman Financial Data Warehouse as of June 30, 2020.

Decisions regarding Social Security are highly personal and depend on a number of factors such as your health and family longevity, whether you plan to work in retirement, whether you have other income sources as well as your anticipated future financial needs and obligations.

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