Conocophillips: 6 To 9 Percent Match
ConocoPhillips employees can receive a 6 percent contribution if you contribute 1 percent of your salary. Additionally, Conoco offers contributions of 6 percent, 7 percent and 9 percent based on years of service and age. Employees are fully vested after three years and 1,000 hours of service each year.
Best Retirement Plans For Small Businesses & The Self
Self-employment is increasingly popular in the United States. According to the Pew Research Center, in 2019 16 million Americans were self-employed, and 29.4 million people worked for self-employed individuals, accounting for 30% of the nations workforce.
Being a small business owner or a solo entrepreneur means youre on your own when it comes to saving for retirement. But that doesnt mean you cant get at least some of the benefits available to people with employer-sponsored retirement plans.
Whether you employ several workers or are a solo freelancer, here are the best retirement plans for you.
|Who Is It Best For?||Eligibility|
Self-employed business owners with no employees .
Higher contribution limits than IRAs.
Contributions are tax-deductible as a business expense.
Communicating 401 Plan Benefits To Potential Employees And Educating Current Ones
With a high-quality retirement plan in place, the next step is a major commitment to marketing this benefit wherever your recruitment efforts take place. Communication steps can include:
Don’t stop at an initial communication. Regular updates on plan benefits and enhancements, as well as annual contribution changes can keep employees engaged and help them manage their retirement accounts. Keeping employees apprised of their financial gains by providing monthly updates that show how much has been saved and how the funds grow month-over-month. Also, be sure to have someone available to answer questions about the plan and retirement-saving in general.
Retirement savings for small business owners: contributing to your own 401
Just as workers should plan for their future, so should business owners. However, many don’t.
According to 2019 research from SCORE, 34 percent of small-business owners said they did not have retirement savings plans for themselves, and 40 percent of business owners said they were not confident that they would be able to retire before the age of 65.
There’s also the notion that small-businesses owners don’t want to retire, and therefore don’t need to save because they will always work. But circumstances outside of their control, like illness, may make a situation without a savings or exit plan challenging. Consider the financial toll of the COVID-19 pandemic on many Americans. A solid retirement savings plan can help you weather any storm that comes up.
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Best For Small Employers: Employee Fiduciary
Employee Fiduciary has low fees for its 401 plans. The firm invites you to compare their 401 plan against your current plan. It claims to have the same choices as larger firms but with lower fees.
You’ll need $500 to open a plan or $1,000 to convert an existing plan. There are more than 377 mutual funds and ETFs to choose from. It also gives you access to a broker through TD Ameritrade. The fees for its 401 plans are low, and it provides tax return forms and annual report summaries.
The company also sends out benefit statements and has a toll-free number for plan members that need help. Low-cost investment options include Vanguard funds, index funds, and Exchange Traded Funds .
You’ll Regret Leaving This Free Money On The Table
Many companies offer a 401 to their employees, and a lot of them also offer company matching as an extra incentive. A 401 company match is money your employer contributes to your retirement account, usually based on your own contributions and capped at a certain percentage of your income.
Here’s a closer look at how 401 company matching works and how much you and your employer are able to contribute to your 401 each year.
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What Does Vesting Mean
Even if your employer makes a matching contribution to your 401, that money may not be yours. Many employers use their 401s to retain talent, so they include a vesting period for matching contributions. Once the vesting period ends, the money becomes fully yours.
Any money your employer contributes is kept separate from your contributions. Depending on your 401 plan, employer contributions can vest all at once or slowly over time. Once youve finished the vesting period, all previous and future contributions are vested and become yours immediately.
When considering a job change, take into account any money you may be leaving behind because it has not vested yet check your employers vesting schedule for more details.
For more on 401 vesting, check out our article detailing how 401 vesting works.
What Are The Best Retirement Plans For You
If you have a 401 or other workplace retirement plan: First you may want to contribute enough to get any free money offered by your employer via the company match. For more on the pros and cons of these plans, jump to our section on employer-sponsored retirement plans, including 401s, 403s, 457s, defined benefit plans and TSPs.
If youve maxed out your 401 or you dont have a retirement plan at work: Consider an IRA. Jump to our section on the pros and cons of four types of IRAs, including traditional and Roth IRAs. If you already know you want an IRA, check out our round-up of the best IRA providers.
We’ll walk you through the various types of retirement plans below. Bear in mind, these are the retirement plans or accounts available to you depending on your situation. For more information on which investments to choose inside your retirement account, connect to our guide on retirement investments here.
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These 10 Companies Offer The Best 401 Plans
You can find plenty of employers that offer retirement plans with generous matching contributions and low-cost investing options. But if you want access to the 10 best 401 plans, it helps to be an airline pilot, a quarterback, a roughneck or a chemist.
Nearly 50,000 retirement plans, covering more than 57 million workers and about $4 trillion in assets are ranked each year by Financial research firm BrightScope. The best 401 plans have many common features: They have generous matching contributions and offer a large menu of low-cost index funds and set-it-and-forget-it target-date funds.
Here are the top 10 401 plans, according to BrightScope:
1. Delta Air LinesAssets in plan: $7.53 billionPlan features: The Delta Pilots Savings Plan charges less than 0.25 percent per year and the average participant has a $504,000 account balance.
2. National Football LeagueAssets in plan: $1.78 billionPlan features: The NFL Player Second Career Savings Plan has a profit-sharing component and more than 8,200 active participants.
3. Saudi AramcoAssets in plan: $1.95 billionPlan features: The 4,400 participants in the Saudi Arabian Oil Company savings plan have an average account balance of $460,000.
4. Southwest AirlinesAssets in plan: $3.20 billionPlan features: Fifteen percent of the assets in the Southwest Airlines pilots’ 401 plan are invested in Vanguard index funds.
How Can I Take Advantage Of 401 Matching
401 matching is designed to be easy to take advantage of. All you have to do is make contributions to your 401 and youll get extra money from your employer automatically.
If you want to max out the benefit, make sure that youre contributing enough to get the full match that your employer offers. If you get a 50% match, thats like earning a 50% return on investment immediately and with no risk. Youll be hard-pressed to find a better deal elsewhere.
Even if your employers 401 has high fees, it is worth contributing up to the matching limit for the immediate return. Once youve hit the matching limit you can consider whether other savings strategies, such as opening an IRA may be better for you.
If youre concerned about how fees will affect your retirement plans, take a look at Personal Capitals Retirement Fee Analyzer.
401 matching is like getting more money from your employer for free. Taking full advantage of this benefit can make a huge difference in the size of your nest egg and the security of your retirement.
You can run your own numbers on InvestmentZens 401 calculator to see how 401 matching can help your retirement.
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What You Can Do If Your 401 Stinks
If you read this and discover that your 401 plan is one of the best, congratulations! Youre one of the lucky ones. Unfortunately, many of you may read this and discover your 401 plan leaves a lot to be desiredeither because of limited investment choices, high fees, or both.
If your 401 isnt competitive, its not the end of the world. You may simply decide to contribute less to your 401 and more to an IRA or Roth IRA, where you can make your own investment decisions.
Changing a companys 401 plan isnt something that happens overnight. That said, if your 401 plan is terrible, you might want to discuss it with some coworkers and approach management about researching alternatives.
Without pensions and with dwindling confidence that Social Security will be around forever, the 401 is the bedrock of American retirement planning. You deserve the best 401 plan you can find. At the very least, you should take steps to make sure youre using your existing 401 in the smartest way possible. Thats where our recommended tools come in, which can help you analyze your 401 investments and make changes to minimize fees and optimize potential returns.
What Should I Look For In A 401k Plan
Overall, you want to look for an employer that offers 401k matching and the higher the maximum amount your employer is willing to match, the better. And if youre comparing two plans that have the same maximum match amount, go for the dollar-for-dollar match over the partial match, since itll take you less contributions to get more money from your employer.
Another thing to watch out for is a vesting period. Similar to equity compensation, some employers will make you wait a certain time period to vest, or give you ownership over, the matching amount.
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How One Man Became A 401k Millionaire
1) Larry maxed out his 401K every year. He did so since graduation because he envisioned great wealth during retirement.
2) Larry stayed loyal to his firm for 35 years, which has allowed him to maximize his retirement options and benefits. If you change firms constantly, often times there is a 1 year grace period before a company will match. Furthermore, once you do get the company match, there is a several year vesting period before the money is yours if you decide to leave.
3) With 35 years of service, Larry has ultimately been promoted and given salary increases as well. Not only is Larry a partner, he has also built up tremendous social capital within his firm. Larry doesnt need to continue working, but he enjoys working with his friends. The average 401k match should rise over time with inflation.
Companies With The Best Retirement Plans
Today’s workersunless they’ve been in the workforce a very long time with the same employer or work in certain public sector or union organizationswill never know what a retirement pension, or defined benefits plan, looks like in real life. That’s because these retirement plans are going the way of the dinosaur, replaced by the defined contribution plan, typically a 401 account.
What’s the difference? A pension plan pays a guaranteed amount each month, based on salary and years of service. A 401 plan, on the other hand, depends on employee and sometimes employer contributions and reflects the performance of the investments within them.
While the vast majority of businesses now offer 401 plans for retirement, there’s a great deal of difference between the most and least generous among them. For example, some employers offer a generous employer match and even additional contributions based on salary. Others offer a better mix of investment options with lower fees. It’s a good idea to look at the fine print to see what you’re really getting when you enroll.
If you are wondering which companies do the best job setting up their employees for financial security in retirement, take a look at our list for the best retirement plans.
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Why Always Investing To Get The Full Match Is So Smart
Okay, you probably have a lot of different money goals , and retirement might feel a long way off. But consider this: The stock market has historically earned an average return of 9.8% a year. The key word here is average. In any given year, it might be more, it might be less. Theres risk involved. At Ellevest, we assess your risk and recommend an investment portfolio aimed to get you to your goal in 70% of market scenarios or better but still. Risk.
On the other hand, with an employer match of 50%, youre earning a 50% return on everything you put in . Fifty percent. Thats kind of amazing. And then, because that itself gets invested in the market, your 50% gets the chance to earn even more returns compounded. In case youre counting, thats returns on returns on returns.
And heres the situation: Grabbing that match is even more important for women, because the data shows that were behind as it is women retire with two-thirds as much money as men . So this is one opportunity you usually want to jump on.
Ready to jump in? Heres our lead CFP® Professionals advice on how to get started planning for retirement.
Full 401 Matches In 2021
Employers can also choose a plan with a dollar-for-dollar match, with the most common being dollar-for-dollar, up to a maximum 5% of an employees salary. So, using the same example, the employee earning $100,000 might put in $5,000 as 5% of his salary. The employer would then contribute another $5,000. If the employee put in $2,000, the employer would contribute $2,000. If the employee put in $6,000, the employer would contribute $5,000, as per the policy limit.
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Whats This Whole Employer Match Vesting Thing
A lot of employers use a vesting schedule for their 401 matches. Its a way to help them hedge their bets on you as an employee by reducing the amount of money theyd lose if you were to leave the company. Its also meant to give you a shiny incentive to stay.
A vesting schedule determines how much of your employers matching contributions you actually own, based on how long youve worked there. For example, if your employer contributions vest gradually over four years, then 25% of your employer contributions belongs to you after youve been there one year, 50% belongs to you after two years, 75% belongs to you after three years, and theyre all yours once you hit your fourth work anniversary.
Theres another type of vesting schedule, called cliff vesting. This ones more of an all-or-nothing scenario. With a four-year cliff, 0% of the contributions are yours until you hit your fourth workiversary, then 100% of them are all yours, all at once.
All the contributions made after your vesting schedule ends are usually fully vested right away. Oh, and dont worry: 100% of the money you put in yourself is always fully vested.
Best For Payroll Services: Paychex
If you own a small firm and are looking into 401 plans but also need a payroll service, Paychex has what you need. It has an all-in-one service for small employers with a fine reputation. Paychex’s lower-cost options are a nice break from some of the more expensive 401 providers.
Paychex also has HR services and benefits administration that you can use for your business. Business loans and other services also make up part of its services.
It is mainly an HR/payroll services company. However, it has teamed up with other 401 providers for you and takes care of your plan administration. If you choose to use its tax services, you’ll find it charges some extra fees for dealing with tax forms and tax services.
For one fee, Paychex makes for a less costly option for small companies that need more than one service.
Paychex has more than 100 offices around the country. Its customer support lines are open 24/7, making it easy to contact someone when you need help. Small employers are billed based on the number of workers and the number of pay periods each year.
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Q: What Happens If I Take Early Distributions From A 401
A: Any time you make withdrawals from a 401 plan, they are subject to ordinary income tax. But if you take a distribution before turning 59 ½, you also have to pay a 10% early withdrawal penalty. However, the IRS does provide a long list of exceptions to the penalty, though youll still have to pay ordinary income tax.
Which Companies Have The Best 401 Matching
Generous company 401 matches are great. But if your retirement plan offers few investment options or has high fees, even the best 401 match may leave your retirement savings coming up short. Thats why its important to have an excellent plan as well as a high company match percentage.
To give you a sense of whats possible, SmartAsset conducted an in-depth study of companies across different sectors such as finance, tech and energy. If your 401 match and plan seem minor league in comparison to the ones profiled here, consider working with a financial advisor, who can help you optimize your investment returns.
We chose these plans based on numerous factors such as company match frameworks, total assets under management and additional benefits such as access to a bonus pension plan or low fees. The information came from sources such as BrightScope, a financial information and technology company that analyzes 401 plans, and Employee Benefit News . Read on for a sampling of the best company 401 matches and plans currently out there, arranged by average account balance, starting with the largest.
Philip Morris International
- 401 match: first 5% plus 7% bonus
- Total participants: 460
- Net plan assets: $292 million
- 401 match: 4% to 8% of regular pay
- Total participants: 37,000
- Net plan assets: $20.00 billion
- 401 match: 7% of regular pay when you contribute at least 6%.
- Total participants: 43,000
- Net plan assets: $20.70 billion
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