ADP 401k Essential for small business

*Business.com article "Best Business Employee Retirement Plans for 2024" Published May 2, 2024

† This calculator is for illustration purposes only and should not be construed as tax advice. Please consult with your own tax professional for advice.

Monthly Investment Service Fee: ADP Strategic Plan Services, LLC will impose a fee of .10% of covered assets, subject to a minimum fee of $30 per month, as more further described below.

The amount of the tax credit each year is limited. Employers with up to 100 employees may be entitled to an annual tax credit for three years equal to 50% of the costs of starting up and administering a retirement plan and for participant education services. Employers with 50 employees or fewer may be entitled to 100% of the costs for these services. The maximum credit is up to the greater of (1) $500 or (2) the lesser of (1) $5,000 or (2) $250 multiplied by the number of non-highly compensated employees eligible to participate in the plan. An additional credit of $500 per year for the first three years is available to plans that offer an automatic enrollment feature that meets the requirements of an Eligible Automatic Contribution Arrangement (EACA) as defined in Internal Revenue Code Section 414(w)(3.) The maximum credit over 3 years of $16,500 is available to plans that cover at least 20 non-highly compensated employees and offer automatic enrollment.

Additionally, an annual tax credit for eligible employer contributions for five years of up to $1,000 per employee earning $100,000 or less may apply to employers with up to 50 employees but phases out from 51 to 100 employees.

The availability and amount of a tax credit depends on your situation. ADP does not provide tax advice, and you should consult with your own tax professional.

1. ADP cannot provide tax or legal advice. Clients should discuss with their tax advisor. Only registered representatives of ADP Broker-Dealer, Inc. (ADP BD), Member FINRA, an affiliate of ADP, Inc., One ADP Blvd, Roseland, NJ 07068 or, in the case of certain products, a broker-dealer firm that has executed a marketing agreement with ADP, Inc., may offer and sell ADP retirement products or speak to retirement plan features and/or investment options available in such ADP retirement products.
2. Strategic Plan Services, LLC (SPS) is an SEC Registered Investment Adviser. SPS will assess an annual fee for its investment management services equal to 0.10% of Eligible Assets, subject to a monthly minimum as described in the following sentence. This annual fee will be billed monthly, will be subject to a monthly minimum of $30. ADP will collect this fee on behalf of SPS and will calculate this fee for each billing period by multiplying (1) the average daily balance of your Plan’s Eligible Assets as reflected on ADP’s recordkeeping system for the billing period, times (2) the Daily Rate (0.10% divided by the number of days in the calendar year), times (3) the number of days in the billing period. The average daily balance of Eligible Assets for each billing period will be reflected on your invoice. Eligible Assets include all Plan assets except (1) those invested in Plan Sponsor Investment Options (as defined in your Investment Management Agreement) and (2) any outstanding participant loan balances (for this purpose, outstanding participant loan balances include outstanding loans that have been deemed distributed under Internal Revenue Service regulations and any accrued interest on such deemed distributions).
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3. Prices vary based on customization.
4. All data and information shown is for illustrative purposes only and is not representative of any plan or participant. Assumes $3,000/year contribution and 7% annual return.