Five mistakes to avoid when you set up a 401(k)

A 401(k) is one of the best benefits you can offer. It is also easy to set up badly. Here are five mistakes we see often.

1. Choosing the wrong plan type. Starter, Safe Harbor, and Traditional plans have different rules and testing requirements. Pick the one that fits your headcount and your budget for an employer match.

2. Missing Secure 2.0 credits. Many owners do not know they can claim up to $15,000 in tax credits over three years. Claim them.

3. Handling payroll by hand. Manual contribution calculations lead to errors and late deposits. Connect your payroll provider and let the system do the math.

4. Skipping compliance testing. The IRS penalties for a noncompliant plan can be severe. Test early and often.

5. Offering no investment choice. Employees expect model portfolios and the option to build their own.

GlidingPath is set up to prevent all five from the first day.