Simple IRA vs 401(k): Should You Consider Upgrading?

As your company evolves, your retirement plan should keep pace. If you're considering upgrading from a SIMPLE IRA to a 401(k), here are the top five advantages and considerations to keep in mind.

Top 5 Advantages of a 401(k)

1. Higher Contribution Limits

Employees can defer up to $23,500 in 2025 (plus $7,500 catch-up if age 50+), compared to $16,500 for SIMPLE IRAs. That means more savings potential for owners and staff.

2. Greater Plan Flexibility

401(k) plan is a more competitive and familiar benefit, especially for high earners or experiences professionals.

3. Enhanced Talent Attraction & Retention

A 401(k) plan is a more competitive and familiar benefit, especially for high earners or experienced professionals.

4. Expanded Employer Contribution Options

Unlike SIMPLE IRAs with fixed formulas, 401(k) plans let you tailor your matching or profit-sharing strategy based on your budget and goals.

5. Long-Term Scalability

401(k)s can grow with your business and integrate advanced strategies like Safe Harbor provisions or Cash Balance plans as your company matures.

Top 5 Considerations or Trade-Offs

1. Increased Administrative Complexity

401(k)s requires IRS filings (e.g., Form 5500), nondiscrimination testing's, and possibly annual audits once your plan grows.

2. Higher Setup and Maintenance Costs

Compared to SIMPLE IRAs, 401(k)s typically involve provider, TPA, and advisory fees, but startup tax credits may offset these costs for small employers.

3. Fiduciary Responsibility

Sponsors of 401(k) plans are fiduciaries, meaning you're responsible for plan oversight, investment selection, and cost monitoring.

4. More Time and Decision-Making Required

You'll need to work with a recordkeeper, advisor, and/or TPA to select features, manage compliance, and communicate with participants.

5. Transition Planning is Key

While SECURE Act 2.0 now allows mid-year transitions to Safe Harbor 401(k)s, timing and communication with employees are still critical.

Ready to Evaluate Your Options?

Let's talk about whether a 401(k) plan makes sense for your team, and how to make the transition smoothly and strategically.

Scott Higgins | AIF ®, CFP®, CPFA®, NSSA®

Financial Advisor

Since 2012 at Rose Street, Scott has been responsible for helping the firm’s individual wealth management clients with income strategies for retirement and consulting with employers with their employee retirement plans. In free time, he enjoys golf, biking, skiing, cooking, and traveling. Fun Fact, Scott has a hobby of filling growlers with coins!

Securities and Investment Advisory Services Offered Through M Holdings Securities, Inc., a Registered Broker/Dealer and Investment Adviser, Member FINRA/SIPC. Rose Street Advisors is independently owned and operated. #4515345

Trustee vs. Authorized Signer: Who Does What in Your Retirement Plan?

When managing a retirement plan, such as a 401(k), it's important to understand the distinct roles involved in overseeing and operating the plan. Two key roles that often get confused are the plan trustee and the authorized signer. While both are essential to the plan's operation, their responsibilities and authority differ significantly.

What is a Plan Trustee?

The plan trustee is a fiduciary who holds legal responsibility for the plan's assets. This role required the trustee to act in the best interest of plan participants and their beneficiaries. Trustees are responsible for making decisions about investments, ensuring the plan complies with regulatory requirements, and safeguarding the plan's assets.

Key Responsibilities of a Plan Trustee:

1. Oversight of Plan Investment: Trustees ensure that investments are appropriate, diversified, and align with the plan's goals.

2. Fiduciary Duty: Trustees must act solely in the interests of participants, avoiding any conflicts of interests.

3. Compliance: Trustees ensure the plan complies with the Employee Retirement Income Security Act (ERISA) and other laws.

4. Asset Custody: Trustees oversee the safekeeping of the plan's funds.

What is an Authorized Signer?

An authorized signer is someone designated to sign documents, such as plan-related agreements, distribution requests, or administrative forms. While an authorized signer plays an operation role, they do not hold the fiduciary responsibility of a trustee.

Key Responsibilities of an Authorized Signer:

1. Administrative Actions: Authorized signers execute day-to-day tasks like signing checks, approving distributions, or authorizing vendor payments.

2. Limited Scope or Authority: Their authority is confined to the actions specified by the plan sponsor, and they don't have decision-making power over plan investments.

3. Non-Fiduciary Role: Unlike a trustee, an authorized signer is not responsible for the overall management or compliance of the plan.

Main Differences Between a Trustee and an Authorized Signer

Aspect	Plan Trustee	Authorized Signer
Fiduciary Responsibility	Yes, must act in the best interest of participants.	No, acts as directed by the plan sponsor.
Decision-Making Power	Has authority over investments and plan management.	Limited to executing specific administrative tasks.
Legal Liability	Bears legal liability for fiduciary decisions.	No legal liability for plan compliance or investments.
Scope of Role	Broad, encompassing overall plan oversight.	Narrow, focused on administrative duties.

Why Does This Matter?

Understanding these roles is crucial for ensuring your retirement plan is managed effectively and compliant with applicable laws. Appointing the right individuals to these roles, and understanding the scope of their responsibilities, can help protect the plan sponsor and ensure participants receive the benefits they deserve.

Final Thoughts

While a trustee oversees the plan with fiduciary responsibility, an authorized signer handles administrative tasks without the same level of legal obligation. Clearly defining these roles can improve the efficiency and compliance of your plan operations.

Scott Higgins | AIF ®, CFP®, CPFA®, NSSA®

Financial Advisor

Staying Ahead: Key Focus Areas for 401(k) Plan Success in 2025

As 2025 begins, 401(k) plan sponsors are entering another dynamic year shaped by fresh regulatory updates, technological advancements, and the evolving expectations of employees. At Rose Street Advisors, our team remains committed to helping you stay ahead, ensuring your retirement plan remains competitive, compliant, and effective. This blog post highlights key areas to focus on in 2025.

1. Adapting to SECURE 2.0 Updated

The full rollout of SECURE 2.0 provisions continue into 2025. Plan sponsors should prioritize compliance with new rules, such as expanded catch-up contributions and automatic enrollment requirements. Partner with your advisor to ensure that plan amendments are timely and align with the updated guidelines. These changes represent an opportunity to enhance plan design for participants.

2. Embracing Flexible Fiduciary Practices

Maintaining fiduciary excellence requires regular evaluation of your plan’s operations, investment lineup, and participant experience. With shifting market dynamics, now is the time to reassess the performance and fees of your investment options and adjust the plan design to meet employee needs.  

3. Enhancing Financial Literacy Through Technology

A Standout trend in 2025 is the growing emphasis on personalized financial education. Employees expect interactive, accessible resources to guide their retirement decisions. Whether it’s mobile apps, webinars, or AI-driven tools, consider these platforms that resonate with a digitally savvy workforce. Better education means better engagement—and ultimately, better retirement readiness. 

4. Automation and Plan Design Optimization

Automatic features, including enrollment, escalation, and re-enrollment, continue to be regulatory favorites. These features not only align with industry best practices but also significantly boost participation rates. Evaluate how incorporating these features, along with well-chosen QDIAs, can simplify the participant experience and increase overall plan effectiveness. 

5. Strengthening Cybersecurity Measures

As the use of digital platforms grows, so does the importance of robust cybersecurity. Implement advanced measures to protect participant data and ensure your service providers meet stringent security standards. A secure plan inspires trust and safeguards your organization against potential liabilities. 

6. Benchmarking for Competitiveness

With economic pressures and increased transparency, regularly benchmarking your plan against peers is critical. Review fees, performance, and participant outcomes to ensure your plan stays competitive. This analysis also serves as a tool to negotiate better terms with providers and enhance the overall value of your plan.  

7. Streamlining Administrative Processes

Simplify plan administration by leveraging modern tools and outsourcing where appropriate. Efficient processes save time, reduce errors, and allow your team to focus on higher-level strategic initiatives. 

Looking Ahead

As 2025 unfolds, the ability to anticipate and adapt to changes will define the success of your 401(k) plan. At Rose Street Advisors, we specialize in breaking down complexities and providing tailored guidance. Whether it's navigating new regulations, enhancing participant engagement, or leveraging technology, we are here to elevate your retirement program.

If you'd like any specific updates or additional insights for 2025, let us know!

Scott Higgins | AIF ®, CFP®, CPFA®, NSSA®

Financial Advisor

ERISA Bond vs. Fiduciary Liability Insurance: What Plan Sponsors Need to Know

Plan sponsors play a critical role in managing retirement plans, and with this responsibility comes risk. Two essential tools to protect both the plan and the fiduciaries are ERIS bonds and fiduciary liability insurance. Here's what they are, why they're needed, and why plan sponsors should consider them.

What Is an ERISA Bond?

An ERISA bond is a legal requirement under the Employee Retirement Income Security Act (ERISA). It safeguards the retirement plan from losses caused by theft, fraud, or dishonesty by individuals handling plan assets.

• Why is it needed? To comply with federal law and protect plan participants' assets.

• Who must have it? Any person handling plan funds, including fiduciaries.

• Coverage amount: At least 10% of plan assets, with a $500,000 cap (or $1,000,00 for plans with employer securities).

What is Fiduciary Liability Insurance?

Fiduciary liability insurance is optional but vital. It protects plan sponsors and fiduciaries from personal liability if they are accused of breaching their fiduciary duties, such as poor investment decisions or failure to monitor service providers.

• Why is it needed? Fiduciaries can be held personally liable for plan losses due to mismanagement.

• Who benefits? Plan sponsors, fiduciaries, and organizations overseeing the plan.

• Coverage amount: Tailored based on the plan's size and complexity.

Why Would a Plan Sponsor Want Both?

While an ERISA bond protects the plan against fraud or theft, fiduciary liability insurance protects fiduciaries personally from lawsuits related to breaches of duty. Without both, plan sponsors risk non-compliance, financial loss, and personal exposure to legal claims.

In short, the ERISA bond ensures compliance and asset protection, while fiduciary liability insurance offers financial clarity and financial security for those managing the plan.

By securing both, plan sponsors demonstrate a commitment to protecting participants and fulfilling their fiduciary responsibilities effectively.