Have you heard talk of New Year’s resolutions around the office? Any mention of finances or savings going around? Most people have made some money-related resolutions for the year. We all want to feel more secure and financially well moving forward. And a lot of good employees are looking to their employers for help. How can you do this? A common way is to offer a 401(k) plan to your employees and maybe even contributing a percentage of your employees’ contributions.
Don’t know where to start? That’s OK! Let’s look at the basics, then dive into reasons you should offer a 401(k) plan this year and how you’re going to do that.
What is a 401(k) Plan?
A 401(k) is a retirement savings plan. Employers who sponsor a 401(k) plan allow employees to save and invest some of their paychecks before taxes are deducted. Taxes are paid when the money is withdrawn from the account.
Reasons You Should Offer a 401(k) This Year:
1. You’ll see cost savings through stronger retention.
Happy employees lead to improved retention rates which mean cost savings in the long run for your business. What makes happy employees? Savings plans and competitive benefits definitely help. According to Plan Adviser, nearly 40% of employees say they would take a new job if it provided a 401(k).
2. Employee recruiting suddenly becomes easier.
Employees looking for a new job probably have their eggs in a few baskets at the time you’re interviewing them. If they’re looking at two promising opportunities, they’re probably going to compare benefits packages. A strong savings plan like a 401(k) is a valuable bargaining chip in the hiring process.
3. Employer tax savings are available.
Employers who offer a pre-tax retirement savings plan will see tax savings similar to the employees’ tax savings. You’ll get a tax benefit from paying FICA and deferrals are tax-free. So, you do not have to pay taxes on money deferred from employees into the 401(k) plan.
4. It helps small business owners support their own retirement.
Many small business owners push their own needs to the side so they can focus on their business and their employees. One of the advantages of offering a 401(k) savings plan to your workers is you get one too!
5. It supports your local economy.
When employers provide a livable wage, savings assistance, and eventually a secure retirement they help boost not only their local economy but the whole country too. We think as employers and entrepreneurs this is our duty to our country and our loyal employees. This is what makes the American dream a reality.
As a small business, it might seem impossible to afford employee benefits like a 401(k) plan. Things like hidden fees, setup and annual fees, paperwork, compliance headaches, and liability of investments performing poorly might make it seem not worth the hassle. However, these details do not have to get in your way.
To avoid these barriers, many small business owners are choosing plans provided by a Professional Employer Organization because it provides the multiple employer advantage and administration services. These are just some of the benefits of getting a 401(k) plan through a PEO company:
- Co-employment which means you and the PEO share ownership of the plan which offers small businesses much-needed protection.
- No administrative headaches, the PEO takes care of necessary compliance and paperwork for you.
- You only have to pay one simple and affordable annual enrollment fee.
- Enrollment is easy. You simply select your plan options with the PEO and serve as a co-sponsor of the plan.
To learn more, feel free to contact us and speak with one of our benefits specialists.