Retirement plans offer financial security and peace of mind. For participants, retirement planning allows for confidence in retirement and flexibility to meet life’s unexpected turns.
For companies that provide retirement benefits, the advantages are considerable, too. Small business owners should consider why it makes sense to offer a retirement plan to employees.
Attracting Quality Employees
Small business owners need quality workers. Finding the right employees, especially in industries and regions where talented workers are in short supply, means offering them the right employee benefits.
Most people look at more than salary when considering whether to take a job. Employee benefits, including health insurance, paid vacation, and retirement options are among the most popular benefits people expect when considering your company.
As the unemployment rate continues to hover at record-low rates, you want your company to remain an attractive option among candidates. The retirement plan you offer can be a strategic recruitment tool, helping you stand out from the competition for talent. In many cases, employee contributions are tax-deductible, and assets grow tax-free when invested via the plan.
Retirement plans are attractive to employees when they are considering employment and when they are considering leaving. If your benefits differentiate your small business from other opportunities, your employees are more likely to stay when considering other options.
Retirement plans can be designed to incentivize employees to stay longer. Using tools like vesting schedules (where employees only receive full benefit of their plans after a certain date) and increased employer contributions that do not take effect until an employee has been on the job for a number of years compels employees to stay with you longer to reap the maximum financial benefit of their retirement plan participation.
Business owners know the tax advantages of business expenses; retirement plan costs fall into this category. Employer-matching contributions in qualified plans are tax deductible.
Small businesses also can qualify for tax credits for certain types of retirement plans, provided they have 100 or fewer employees, have at least one employee who is not highly compensated, and provided that employees participating had not previously been receiving contributions from a plan you sponsored.
The credit is for up to 50 percent of the startup costs up to $500 per year, including set-up and administration fees and money spent educating your employees about the plan.
As a small business owner, you can also participate in the retirement plan you provide. Doing so helps you reduce your taxable income via pre-tax contributions, defer taxes, and save money for your own retirement.
Benetrends is a leader in providing retirement plan administration for small businesses. Its services help business owners with all aspects of retirement plan benefits, including:
- Plan design that fits your goals
- Administration and compliance with federal, state, and local laws
- Communication to employees
- Reporting and analysis of your plan’s participation and performance
As businesses vary, so do retirement plans. Benetrends offers various retirement plan types for consideration, including:
- 401(k) plans, where employee contributions are tax-deductible, and earnings are tax-deferred
- Roth 401(k) plans, where employees can make post-tax contributions and tax-free withdrawals
- Profit-sharing plans, allowing employer flexibility to contribute a portion of profits to eligible employees
- Defined benefit plans, where contributions are based on age and compensation and can be funded to pre-determined levels of retirement income
Retirement plans are a strategic component of small business employer recruitment and financial planning. To learn more about Benetrends’ retirement plan services, schedule a consultation today.