MVBusiness finances

22

40U<

401 (K): APOWER TOOLFOR SMALL BUSINESSESAcompany retirement plan is a great company perkBY JOHN SPOTO

In theory, retirementplanning is simple: Savea portion of your incomewhile you are working soyou can enjoy a comfortablestandardofliving onceyoustop working.

In practice however,finding the money to saveand determiningthe best wayto savecan be difficult.

This is especially true for small businessandprofessional practice owners(e.g. medical, legal, etc.)whomustbalance the demandsoftheir organization with their own and theirworkers' retirement needs. These challenges,coupled with the perception that sponsoringa companyplan iscomplicated and expensive,causemany entrepreneurs to abandon the ideaentirely.

The facts bear thisout: Despite strongevidence suggestingthat a workplace retirementplanisone of the most effective tools to reducetaxes and boost retirement savings, the U.S.Census Bureau reports that more than halfof businesses with fewer than 100employeesofferno such plan. As a result, many businessownersand their employees feel unpreparedfor retirement.

Establishing a retirement plan that meetsboth your business and personal objectivesneed not be a daunting task. Recent legislation, as well as developments in plan designand services,has reduced the complexity andthe cost of setting up and maintaining suchapian.

In other words, takingaction is easier thanyou might think.

Of the various plan options availableto small businesses, the most flexible and

widely-used is the 401 (k). Whether you areestablishing a 401 (k) plan for the first timeor upgrading an existingone, by following asensible methodology, small businesses canenjoy thebenefits ofa professionally designed,cost-effective retirement plan.

Here is what I recommend for small busi

ness owners:

• First, establish your goals for the plan.What do you want to accomplish? Is yourobjective to maximize contributions andreduce taxes for yourself,or is it to attract andretain top employees? Your plan design canbe tailored to help you accomplish your mostimportant goals.

• Second, identify the service providers to the plan and understand the role eachserves. It is important to select providers whowill act in your best interest. Typically, theprimary providers are those responsible forhelping design the plan, holding the assets,handling employees' deposits and withdrawals, and providing ongoing investment advice,educationand guidance.

• Third, clearly identify all fees associatedwith establishing and maintaining the plan,including those that you and your employees pay as participants. Yourobjective as thebusiness owner is to select the plan that bestserves your interests and those of your company and employees at the lowest possiblecost.All thingsbeing equal,plan expenseis thesingle most important factor in delivering thegreatestvalueto you and your employees. Beaware that there is no such thing as a "free"

plan. Charging excessive fees to small business owners has long been an area of abuse.Although there are new regulations in placerequiring greater transparency,do your homework to ensure that you are getting the bestvalue for your money.

• Fourth, create a menu of a limitednumber of investment options that allowsyour employees to build a low-cost, diversified portfolio. The key to creating thismenuis to choose quality over quantity. Too manyoptions will increase the plan cost and createunnecessary complexity. In other words "lessis more."Also,for those participants who maybe uncomfortable selectingtheir own investments, offersome pre-constructed portfoliosthat provide broad diversification at variouslevels of risk. Thisapproach will reducecostsand give all participants the best chance ofreachingtheir retirement goals.

• Fifth, be sure your plan providers arecommitted to working with you to monitorthe plan and ensure that it remains consistentwith your goals and those of the businessand your employees. This includes providingongoing education and communications toplan participants so they have the necessaryinformation to make informed saving andinvestment decisions.

Today, settingup and operatinga cost-effective 401(k) plan is within reach of anysmallbusiness or professional practice. By takingthe time to identify your goalsand choosingthe right partners to work with, you can addto your workplace toolbox a powerful tool tohelp you and your employees achievea secureretirement. EHj

8.2 million American women are atthe helm of their own companies.

storybehind the person at the top.Transparency encourages greatercommunication, teambuildingandleadership.

• Develop and Use Your Personal Network: Find a mentor

and be a mentor; seek out otherwomen at your level; and acceptthestrength, ideas andenergy yourconnections have to offer. It is no

longer necessary to blaze trailsalone. Women have more powerthan they may realize. Accordingto a Dow Jones report, start-upswith five or more female execu

tives have a 61 percent success rate.Itgoesfurtherand says that odds ofsuccess "increase with more female

executives at the vicepresident anddirector levels.

• Stand for Something: Position yourself as a strong thoughtleader.It'snot easybeing at the top.Women tend to distrust powerfulwomen,and men mayviewwomen

as weak or too collaborative and

sensitive. Take a firm stand on

something you care about deeplyand rally the organization aroundthat objective. You will gain therespect of your peers, customersand stakeholders.

As the numbers clearly demonstrate, business ischanging. Womenaccount for 73 percent to 85 percent of consumer decisions in the

United States, which gives femaleCEOs yet another advantage —insightinto their customers' values.

Remember, you can use all ofthese facts to your advantage toachieve the utmost professionalgrowth.

Debora McLanglilin isthe best-selling author of"Vie Renegade Leader:9 Success Strategies Driven LeadersUse toIgnite People, Performance andProfits" and "A League ofHer Own,"and CEO of The Renegade LeaderCoaching and Consulting Group.

A ssociates inv_yrthopedics

Haverhill & North Andovcr. MA

Associates in Orthopedics offers diagnostic, medicaland surgical management of a wide variety of

musculoskeletal problems, from fractures to arthritis,from osteoporosis, to joint replacement.

Our services include: Treatment of Fractures

Sports Medicine • Arthroscopy • Joint ReplacementInjuries to Ligaments, Muscles, &Tendons

Specialized Hand Care and more.

CALL US

Haverhill - 288 Groveland St.

978.373.3851

North Andover - 231 Sutton St., Unit 1E978.725.0900