Own a Business? We Can Manage Your 401(k)

Many business owners aren't getting as much out of their 401(k) as they could. Some can't contribute the full amount because the plan fails the testing the IRS requires each year. Others have a plan that was set up years ago and no longer fits where the business or their own retirement goals are today. Either way, you may be leaving opportunity on the table.

Our team manages the plan alongside you, helping you make prudent decisions based on industry best practices and tailoring the plan to meet the specific needs of both your employees and you as the business owner. Here are a few things you might not be aware of.

You're responsible for the plan

When your company sponsors a 401(k), federal law treats you as a fiduciary. In plain English, you're responsible for making sure the plan is run in your employees' best interest. That covers the investments on the menu, the companies you hire to run the plan, and the fees your employees pay.

If something goes wrong, that responsibility can fall on you as the business owner. A fund that lagged for years but never got replaced. Fees that crept up while no one was watching. Those are the kinds of things that may lead to employee complaints, Department of Labor questions, and in some cases lawsuits against the owner.

What may protect you is a good process and a record that shows you followed it. We help business owners put that in place. We meet on a regular schedule, review every investment in the plan, put together a written investment policy statement, document the decisions that get made, and compare the plan's costs to similar plans. If anyone ever asks how the plan is being managed, you'll have a clear answer.

You may be able to save a lot more

Every year, the IRS requires 401(k) plans to show they aren't favoring owners and higher earners over everyone else. If your employees aren't contributing much, the plan can fail those tests, and owners end up with their contributions capped or even refunded back to them.

There are two ways we help fix that. The first is plan design. We look at what you want to save and what's getting in the way, then recommend changes that fit your business. That might mean adding a safe harbor contribution, which may let the plan skip some of the testing altogether. It might mean changing the match formula, adjusting who's eligible and when, adding automatic enrollment, or adding profit sharing. The right combination can raise how much you're able to save while still being fair to your team.

The second is getting more of your employees involved. Testing gets easier when more people are contributing. We hold annual meetings, meet with employees one on one, and explain the plan in a way that makes sense to them. When employees understand the plan and see the value in it, more of them may sign up and save more. That helps them, and it gives you more room to save too.

For 2026, the employee deferral limit is $24,500, plus an $8,000 catch-up contribution for employees age 50 or older. The combined employee and employer contribution limit is $72,000, and with catch-up contributions, the total can reach up to $80,000.

Your employees may need some help

A strong 401(k) is most valuable when employees understand how to use it. We educate your team on general investing principles, including diversification, volatility, Roth vs Pre-Tax, and the importance of consistent saving. We also thoroughly explain the plan's features and investment options so employees can make informed decisions with greater confidence.

Our support to them is ongoing. We remain available as questions or needs arise, helping employees understand their plan, their investment options, and how to make changes as their circumstances evolve. This gives employees a trusted resource and helps them make more informed decisions about their retirement savings.

You should know what you're paying

Every few years, it's worth comparing your plan to what else is out there. We review your fees, your provider's service, and the investment options, and when it makes sense we'll shop the plan to other providers. Sometimes you're in good shape and we tell you that. Sometimes there's a better deal available, and a change may be prudent. Regardless of the outcome, regularly benchmarking your plan helps ensure it remains competitive and continues to serve your business and employees effectively.

The rules keep changing

Retirement plan rules may change almost every year. Some changes add new requirements. Others open up options that weren't available before. We keep track of them and sit down with you each year to go over what's changed and whether your plan should change with it.

Put Your 401(k) in Capable Hands

A 401(k) can be a valuable benefit, but managing one comes with responsibilities that can be easy to overlook. From plan administration and fees to documentation and changing compliance requirements, there is a lot for a business owner to keep track of. Staying current can take considerable time and attention, especially as the retirement plan landscape continues to evolve. We work alongside you to help manage those details, keep the plan on track, and make the process easier for you and your team.

As always, our team is here for you!

Dustin A. Husarik CFP®

Executive Vice President

Magnan Family Wealth Management

This information is made available with the understanding that Wells Fargo Advisors Financial Network and its affiliates are not engaged in rendering legal, accounting or tax advice. Any discussion of taxes represents general information and is not intended to be, nor should it be construed to be, legal or tax advice. Tax laws or regulations are subject to change at any time and can have a substantial impact on an actual client situation.