Small Business Challenges
In order for a small firm owner to be competitive in a local hiring market, we often find ourselves needing to keep up with the benefits offered by larger firms. I started my office in 2010 and over the years I found I could only afford entry level staff to help me meet my contractual obligations. My strategy was to train young professionals to be able to support the production workload and accelerate their capabilities with intensive one-on-one time. What often occurred, though, was that after 2-3 years the staff member would get a better offer (more money and better benefits) from a larger firm and then leave. By the fourth departure I tried to reorganize my own priorities to include not only training but staff retention. I began asking colleagues in larger firms, none of which would consider me a competitor for projects, how much they offered for starting salary; type of benefits, etc. I observed that all offered the basics but very few offered flexible time and the ability to work remotely from home. Better informed, I began developing a benefits package that offered the basics: 401k, healthcare, vacation/paid time off and also included flexible start times and working remotely.
I looked to the AIA Trust to assist me with my benefits package; in particular the 401k and the healthcare component. I was not able to find an ACA compliant package through the Trustin my State, Florida, but I did find a 401k plan offered through AXA Financial Advisors. There are no fees charged by the provider to manage the plan--that alone is a savings of $2k-$3k as compared to several nationally recognized companies. An AXA managed 401k is free for AIA members. Additionally, the management of the plan is fairly simple; below are a few of the steps in a typical month:
- Pay staff through a payroll service. I use Quickbooks Payroll. The service retains the staff member’s elective deductions in my operating account.
- On the same day I run payroll I also run the 401k deduction by logging in to my AXA account. From their website you can initiate both the elective deduction for the employee and the matching contribution from the employer (the percentages are predetermined by the IRS in order to remain in compliance with laws, but you are responsible for remaining in compliance). AXA debits your account the next day for the total aggregate amount for all employees and employer contributions. On the “back end” they distribute that lump sum amount into the respective accounts.
- Once a year you are required to file a “Top Heavy” compliance form. This report is facilitated by AXA and they file it electronically on your behalf. Your only responsibility is reviewing the document and digitally signing it.
Offering 401k to my employees is as simple as the above. The matching contributions are an additional expense, naturally, but a necessary one in order to stay competitive with other, larger firms. As an additional incentive/penalty for leaving the firm the law allows you to establish a graduated vestment schedule before which a portion of matching contributions are forfeited by the employee should they leave early. The forfeited money is moved into a forfeiture account from which you can pay future contributions for the remaining or future employees.
I chose to use the AIA Trust as a resource to offering my employees a retirement plan. I have been very pleased with the quality of the plan, the investment funds it offers and user-friendly web interface. In a competitive hiring market, AIA member owned small firms should use all of the resources offered to us by the AIA in order to attract and retain the best people.