Retirement Plan Design Guide

All the insights you need to know to help maximize the benefit for you and your employees with a custom plan.

Business Owners Need Trusted Retirement Plan Support

(1) Find a third party retirement plan administrator (TPA) you can trust.

Whether you’re developing a new plan or switching administrators, your TPA should make sure everything is taken care of and the plan is designed to fit your needs. This allows you to focus on running your business.

Your retirement plan TPA should stand shoulder-to-shoulder with you throughout the life of your plan to ensure you properly attend to your fiduciary duties and that you, your business, and your employees continue to receive maximum benefit from your business retirement plan. As part of your qualified retirement plan design, your plan administrator will help you:

  • Choose the plan that is right for you
  • Draft the plan documents and set up the plan
  • Prepare notices for your employees letting them know how to participate
  • Perform annual testing to make sure the plan is compliant
  • Process plan distributions and loans
  • Amend the plan when legislation requires it or when the needs of the company change
  • Make sure you are getting the most out of the plan

At the end of the year, your dedicated administrator needs to take the time necessary to perform a thorough evaluation of your plan’s overall health so you have a clear understanding of your plan’s status. You have enough to worry about—let your TPA help get your retirement plan in shape.

You Have Options Beyond 401(k) or Safe Harbor 401(k) Plans

(2) Understand that you have options.

Some 401(k) TPAs may suggest cookie-cutter plans that are easy to establish and administer. Look for an administrator that will provide a comprehensive analysis of available options and are able to identify enhancements and additional benefits over and above these plans in many cases.

The reasons why you’ve decided to set up a retirement plan for your company will determine which plan is best for you and which features you'll want to include. It doesn’t matter if your main goal is to put away money for yourself, reward top-performing employees, or be more competitive in recruiting employees, your retirement plan TPA will help design a plan in line with your intentions.

Many business owners enter the conversation having done some research and have an idea what their plan should look like, but that research is unlikely to include detailed information customized to you and your business. That’s why a good TPA will work with you to create a custom plan designed to meet your goals and build successful outcomes for everyone at your company. You can explore options customized for you and your business needs, with considerations like:

  • Waiting periods for employee and employer contributions, entry dates, and employee classifications
  • Excluding bonuses, overtime, commissions, or fringe benefits in the formula for computing contributions
  • Provide contributions only to full-time employees who don't quit during the year
  • Tiered allocation and age-weighted formulas instead of basic pro-rata contributions

Having flexibility with respect to your plan design is the difference between a retirement plan that works and one that works for you. While your company may already offer a plan to your employees, could it be better or offer more flexibility for what you want the plan to provide?

Take a look at our retirement plan finder for more information on the various defined benefit retirement plans available.

Safe Harbor 401(k)? 403(b) vs 401(k)? Experts Guide You Through Your Business Retirement Plan Options

(3) Leverage the expertise of your TPA to help you choose the best business retirement plan for your needs.

There is more to retirement than 401(k) plans, and for some clients it isn’t the best fit. Highly trained TPAs help design a plan that fits not only your needs, but the unique needs of your company and industry.

There are many options and rules when it comes to retirement plans, all of the regulations can be confusing and overwhelming. Your administrator understands that, and can help you answer some important questions:

  • What should you take into consideration when starting a plan?
  • What does it really cost to maintain?
  • What type of plan is best for your company?


401(k) plans are likely the most well-known by name, permitting employees to elect to contribute to their retirement via pre-tax payroll deductions. An account is maintained for each plan participant, but the retirement benefit is not guaranteed, as contributions will vary and fluctuations in the market will cause the account value to change.

401(k) Safe Harbor

In addition to the standard provisions of a 401(k) plan, the employer provides an additional “Safe Harbor” contribution. For a 401(k) plan to be considered a Safe Harbor plan, employers must satisfy certain contribution, vesting, and notice requirements.


Though similar to a 401(k) plan, the 403(b) plan type is only available to certain entities, including non-profit organizations. The plan permits employees to defer contribution into the plan, but there is a Form 5500 filing requirement for 403(b) plans that have employer contributions.

403(b) vs 401(k): What’s the Difference?

When evaluating 403(b) vs. 401(k), you’ll find many similarities. And, in most regards, they're the same plan, with the 403(b) serving the same purpose as 401(k) plans. The main difference is that 403(b) is an option only available to nonprofit companies, religious groups, school districts, and governmental organizations. These organizations are exempt from certain administrative processes that apply to 401(k) plans for most organizations, meaning administrative costs for a 403(b) are lower.

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Matching contributions are employer contributions made in relation to employee contributions from payroll. Often these contributions are effective mechanisms to encourage employee participation in their own retirement but it can also be the cheapest way to make additional contributions to higher-paid employees in safe harbor plans.

Profit Sharing

Profit sharing contributions can be discretionary, determined annually, and give employers a lot of flexibility when it comes time for tax planning. Profit sharing contributions are required in almost all circumstances to get targeted employees to their annual contribution maximum.

Defined Benefit

A Defined Benefit plan promises to pay employees a certain amount of income at retirement and accounts are expressed in terms of a monthly benefit. Contributions are made by the employer on a pre-tax basis and are intended to grow so there will be adequate funding at retirement. In a Defined Benefit plan, the risk of the investment lies with the employer, as no matter how much the employer contributes, a participant is still guaranteed a specific retirement benefit.

Cash Balance

While benefits are still provided as they would be under a Defined Benefit plan, Cash Balance participants have a “hypothetical account” which is equal to the “pay credits” and “interest credits” they have earned over their participation in the plan. This formula allows the employer greater contribution predictability, making it an extremely valuable tax planning tool. Cash Balance plans are generally preferable to Defined Benefit for companies with employees.


An Employee Stock Ownership Plan invests primarily in company stock, so employees eventually become owners of the company through the plan. Since an ESOP plan is part of employees' payment for work, ESOPs can keep participants focused on the company’s overall performance.


Cafeteria plans allow pre-tax contributions to fund benefits such as insurance premiums, dependent care, and/or uninsured medical expense reimbursement. Employers save employment taxes on Cafeteria plan contributions, and workers’ compensation premiums are reduced.


A 457(b) plan may be adopted by non-profit, non-governmental companies. These plans allow employees to elect to defer contributions via payroll deduction and eligibility is restricted to a select few highly compensated employees. A 457(b) is often paired with an existing plan where the executive director or management team wants to make contributions above and beyond what is available to them through the 401(k) or 403(b) plan sponsored by the employer.


In a Rollover Business Startup (ROBS) plan, rollover money from qualified plans or IRAs are used to buy stock for a new business venture. With an individual account, the individual may elect to invest up to 100% of their account in the form of employer stock. By rolling cash into the plan, then using that cash to buy company stock, the cash is freed up to help with business expenses. C-corporations are the only entities allowed to start a ROBS plan and an independent valuation of this company is required each year the stock remains in the plan trust.

Prevailing Wage

Many companies satisfy prevailing wage law requirements by contributing that amount to a benefit plan on behalf of the employee rather than paying it to the employee in cash. When paying the fringe as compensation the payment is subject to payroll taxes, but it is not taxed when fringe is contributed to a benefit plan. This fringe may also be used within a qualified plan to help pass the ADP test on deferrals or offset profit sharing contributions.

Retirement Plan Design Frequently Asked Questions

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Learn more about the business retirement plan options available to you.

Go to the Retirement Plan Finder