When companies choose to offer 401(k) or defined benefit plans, they generally do so to safeguard their teams and key personnel during retirement. They’re a great and adaptable safety net and a strategic choice for your business. But not all of us are fiduciaries, or even financially savvy, and between running your business and everything else on your plate, it’s easy to miss opportunities—or worse, fall into expensive traps.
Even the most effective entrepreneurs can be susceptible to these three common mistakes with retirement plans, which can also, unfortunately, be some of the most costly.
- Setting it and forgetting it
Markets shift. Tax laws change. Your business grows. That plan you set up five years ago? It might not fit anymore. Regular reviews aren’t just smart—they’re part of your fiduciary responsibility. Missing optimization opportunities can mean leaving significant tax deductions on the table.
- Overlooking contribution strategies
Many owners contribute the minimum or stick with default options. But defined benefit plans especially can be structured to maximize your personal retirement savings while offering meaningful tax advantages. The right contribution strategy should align with your business goals, cash flow, and timeline to retirement.
- Ignoring the fine print on fiduciary duties
ERISA and IRS requirements aren’t suggestions. Missing deadlines, inadequate documentation, or poor investment oversight can trigger penalties and audits. Your fiduciary responsibilities extend beyond just offering a plan—you need to actively monitor it.
The good news? These are all fixable. A quick plan review can identify where you’re losing money or taking unnecessary risk. Whether you’re running a manufacturing shop in Warren or a professional practice in Birmingham, your retirement and defined benefit plan should work as strategically as every other part of your business. Ready to optimize your plan? Let’s talk. With three decades helping Michigan small businesses, I can show you exactly where the opportunities are hiding.