By the Madison Pension Editorial Team
When most business owners think “retirement plan,” they automatically presume a 401(k) plan. With approximately 513,000 401(k) plans covering more than 88 million American workers as of April 2014, this is the most common retirement plan companies offer to employees.
There are a number of reasons why the 401(k) has remained a go-to for so many business owners. The plan offers their employees the opportunity to defer their own money on a pre-tax basis as well as significant flexibility in terms of the employer’s contributions. Overall, for many business owners today, a 401(k) plan is considered one of the easiest and more cost-effective retirement plans to maintain on a day-to-day basis.
But just because the 401(k) plan has, over the years, emerged as the retirement plan option of choice for U.S. companies does not mean that it is in your best interest to follow the herd. Rather, a savvy retirement plan sponsor should explore other plans that may be best for his or her organization based on its unique specifications—not what is well-liked among the many.
To determine which retirement plan is right for your organization, you must first familiarize yourself with retirement plan options that exist outside of a traditional 401(k) plan. In this blog we will explore a defined benefit/defined contribution (DB/DC) “combo” plan—the first of a few alternate plans in this ongoing series designed to help business owners and/or plan sponsors determine the best-fitting plan for their organization.