Amazon DSP Owners And Their Business 401k Plan
Updated: Sep 7, 2022
Amazon DSP Owners And Their Business 401k Plan
It has come to my attention that a lot of amazon dsp owners do not have an ongoing 401k plan or they have one but are currently using a third party payroll processor for one. Yes we know 401k plans are important for you and your drivers. It's not just something to consider for yourself but also overall employee retention. After helping one amazon dsp owner get a 401k plan and another one to switch their plan to me; I learned a few things along the way.
Administrative Expenses
The third party payroll processor that amazon recommend you use whether that's ADP, Paychex, Gusto or any of others have astronomical fees associated with having a plan. Not only do they charge you a fee per participant on the plan but they also charge high commision fees. Their fees are hidden within the funds that the employees invest into the plan. On average 9/10 businesses are overpaying for their plan. Not all plans are the same!
Poor Service
These companies are 3rd party payroll servicer's at the end of the day. They do not specialize in 401k plans, they do not even have the right company to hold the assets in custody. Which is why they actually broker the plan to another company. Yes that's right! They middleman your plan to another company. This is the reason for the high fees. Because the plan is middlemanned, the service remains poor. When you want to make changes are ask for advice on how to optimize the plan, customer service cannot really help you with this. They can only answer administrative questions on how to use the platform. After all, company retirement plans are not their specialty.
Optimization
Every business owners company retirement is different. They all need the proper features and plan options to pertain to them as the business owner and their employees. When you are an amazon DSP owner with 30 to upwards of 1000 drivers, it is crucial to ask yourself if you are getting the best plan possible. Does your plan need auto-enrollment so your new hires can be on the plan as soon as possible or is employee turnover really high and you want to let your employees have the freedom to choose if they want to enroll or not? Do you want default investment accounts setup so that the average employee does not need to choose their investment options? This is why it is important to have an advisor on your plan. Advisors can benchmark the plan so that you rank in the 90th percentile with your company's retirement plan. What if I told you we can beat the average logistics company's investment return? We have the data to do this. Payroll servicers do not!
Last Thoughts
Third party payroll processors have a very important role. They streamline your payroll and make the job really easy but beware when you sign up for outsourced add-ons such as HR or retirement plans. They are not the same in quality, even if they try to lure you in and say it will be easier to bundle all the services together with them. They are great when it comes to small companies' with 1-4 employees when maybe you and your spouse want a 401k plan and you don't mind the weekly fees. When the funds and the employee count within the company grows, that's when the fees start compounding and poor performance within the plan starts. It is always best to consult with an advisor and look into launching a real business pension plan with proper tools and the service it needs.
If you are responsible for managing your company’s retirement plan and are concerned about your current investment options, I can help. My specialty is reviewing and adding 99% value to all of my clients’ retirement plans. Contact me today If you’re ready to get the most value from your company’s retirement plan and protect yourself from personal liability as your company’s fiduciary.