Choosing a One Man 401k Plan

I run a plumbing business where I am the owner- employee. I don’t employ any others as of now for my business. Can I set up a 401k plan for myself online? What should I look for in such a plan? Sidney B. Daniels, New York

Until as recently as the year 2002, it would not have been possible for you have a 401k account for your business unless you had more employees. But now you can definitely set up a one man 401k plan for yourself without needing multiple plan participants. This plan is the perfect one for small business owners who do not employ others. You can even have this plan if you employ just your spouse in your business.

The easiest way to set up a one man 401k plan is to go with a ready to use suite like There are a few points to consider before you decide on the 401k suite you want to sign up for. The most important point is that the suite should have a good choice of investments on offer. This will ensure that you can invest your 401 funds in avenues that give you the best returns with least risk.

The cost of the plan is another point to think about. Comparing DIY suites on different sites will tell you if the one you are looking to sign up for is really competitively priced. The suite should be easy to manage and administer so that you do not end up spending hours of your time every month keeping the account up to date. A good way to test out a 401k suite is to try a free demo. This hands on experience with the package is the best way for you evaluate if it is indeed the right one for you.

Offline 401k Suites vs. Online

I run a graphics design firm from my home that caters to a few businesses in the neighborhood. Some of my employees work from home while a couple are based in my home office. I need a 401k plan that can be accessed by all of my employees irrespective of where they work from. Christina P. Smartt, PhiladelphiaPA 19103

Christina, the best option for you is to look for an online 401k suite like the one offered at These are software packages that can be operated by you or your employee from any place. Here is how it works.

In general, online 401k suites are the ones that are easiest to manage because you do not need to be at your desk to update records or view your account status. The software of your online 401k version is usually housed on a secure server. When you want to pull up your 401k account all you have to do is get to a computer with an internet connection, log in and start accessing the account.

A good 401k suite will let you customize the plan to match your unique needs. With a online 401k suite like this one, your work from home employees can access their account right from their homes while you and the employees working out of your home office can do so right here. Make sure to check all the features of the plan before you sign up for an online 401k DIY package. The 401k suite should give your employees the flexibility to change their investment choices, modify personal details and opt for different plan options. Of course, any new employees should also be able to view all the details about the plan and join online too.

Offering No Load Mutual Funds with 401k

A friend tells me that the 401k plan I offer to employees should have a really good choice of mutual funds. Do employees really prefer such plans?- Robert S. Shoemaker, electronics shop owner in Bountiful, UT 84010

Robert, it is definitely true that more and more employees are showing a clear preference for mutual fund investment using the funds in their 401k plan. Mutual funds offer a great way for small investors like your employees to get some good returns. Plus, the fact that mutual funds are relatively low risk makes investing anxiety free for them. Because many people had their savings wiped out by the recession, you will find that safer investment avenues like mutual funds are more popular today.

Another aspect also makes these investments attractive to employees of small businesses. By investing in a mutual fund, your employee gets to participate in an investment that is managed by professionals and experts. Even if the employee himself is a novice when it comes to investing, he still benefits from the experience of the fund manager.

These are some of the reasons why employees like 401k plans that give them a good choice of mutual funds to pick from. If you have plans to set up a 401k for your employees, then you can opt for a DIY suite like the one offered by This suite not only lets you set up, manage and update the plan with the greatest of ease but also has a comprehensive line up of no load mutual funds from some top rated companies. Choosing a DIY package like this one gives your employees the freedom to quickly implement their investment decisions using the 401k funds. It is also easy to track a plan through monthly statements when you are using this kind of software to run it.

How Does 401K Make Your Business More Appealing to Employees?

Is a 401k plan really an attractive benefit for my prospective employees? Are there any other benefits I can offer that will help me find and retain the best talent in the market in a better way? Antonio D. Mercer, Martin, SD, runs a graphics firm

Experts say that most prospective employees consider an employer sponsored 401k retirement benefit plan one of the most attractive features when they are assessing employment offers. Other than health benefits offered by the firm, there is perhaps no better benefit you can offer that makes you a more sought after employer.

A 401k plan tells a prospective employee that you are a responsible and empathetic employer. The fact that you are encouraging them to save for future does a great job in boosting employee morale. Of course, this shows in your increased productivity levels too. If you have an employee contribution match option with your 401k plan, then the employee is sure to count this point as a real big plus in your favor. After all, any contribution match that you make into his account is free money where he is concerned. The tax advantage that the employee gets results in actual savings for the employee paycheck after paycheck.

Post recession, many small businesses that previously had no such programs, realized the importance of offering a safe and easy retirement benefit plan. If you are keen on adding such a plan to your business, the process is quite simple with the many ready to use 401k software suites available today. Check out the various options you have on, where you will find a listing of the top rated 401k suites in the market today. These suites make set up, administration and updating of these plans simple and quick so that you just need to invest a few minutes each month to keep the plan going.

Roth 401k vs. Traditional and Roth IRAs

How does the Roth 401k compare with the Traditional IRA and Roth IRA? What are the advantages of a Roth 401k for my sweet shop employees? – Haydee J. Fries, Delafield, WI 

The Roth 401k is a very useful plan for an employer to offer his employees to ensure their future financial security. It was introduced fairly recently in the year 2006. When compared with the Roth IRA, both plans have several similarities. In both these savings plans, the contributions are made with after- tax dollars. That is, your employee makes his contributions into this account after paying tax on his paycheck. Because it is taxed at this time, the employee gets to withdraw funds from the account tax free in future. This is especially advantageous to those employees who stand a good chance of falling within a much higher tax bracket at retirement time. They pay less tax now on the contribution to avoid paying taxes on the same funds at a higher rate later.

In contrast, contributions to a traditional IRA are made with pre tax dollars. A part of the employee’s paycheck is directly credited into the traditional IRA before he pays tax on the rest. Since he has not paid tax on the funds in this account at the time of making the contribution, tax is charged at withdrawal time. For those who will have very little income post retirement, this could be quite advantageous. But since it is impossible to predict what your financial status will be at retirement time, many employees prefer the Roth version of the 401k where they can simply pay the tax right now when they have a regular income instead of worrying about it later.

You can read more about these plans and also compare a few 401k suites at Use a ready to use software suite like the ones listed here to make the set up and administration of your Roth 401k plan easy.