With people living longer than they used to, it is more important than ever that people start saving for retirement as early as possible. However, many people who work at small businesses do not have access to a 401k plan, as only 15% of businesses with 100 employees or less offer their employees retirement plans, and only 50% of Americans overall have access to a workplace retirement plan. Generally, small business owners do not want to offer a 401k plan due to the time and money they would have to invest to offer these benefits. While this is a valid concern, the fact is that the pros outweigh the cons of offering your employees a 401k plan. Here are just a few of the benefits you could gain by offering a 401k plan to your employees.
Attract and Retain Employees
Job seekers these days look at a variety of factors when considering what company to work for, with a competitive salary, quality healthcare coverage, and a retirement plan being among the key benefits candidates look for in a potential job. In fact, according to a 2016 study, 70% of employees surveyed reported that a small business retirement plan was a "must have" benefit when looking for a job. This can then make it difficult for small businesses that do not offer a retirement plan to attract and retain quality talent, as the best candidates will look toward larger companies that can offer better benefits. By offering a 401k plan to your employees, your small business will likely have an easier time attracting and retaining motivated, skilled employees who will help your business to thrive.
Plan for Your Future
401k plans are important for business owners as well as their employees, as small business owners often do not think about preparing for their own future. Many small business owners focus solely on the success of their business and on doing everything they can to keep it running, without taking time to plan for their future financial security. By setting up a 401k for your business, you will be helping to ensure your own financial security as well as that of your employees, making it possible for you to retire one day in the future.
Potential Tax Savings
For business owners who are worried about the financial implications of offering a 401k to their employees, you will be happy to learn that new small businesses may be able to receive a $500 tax credit for startup administrative costs for the first three years they offer a 401k. Additionally, if you offer your employees any kind of 401k match, these employer contributions will be tax deductible. Furthermore, any money you invest in your own 401k you will also be able to deduct from your personal taxes.
Offering a retirement savings plan to your employees can also help to boost your business's overall productivity. This is due to the fact that knowing that their future financial security is taken care of can help to make employees feel more relaxed and happy, which is important as a recent study found that companies whose employees are happy are 22.2% more productive. By offering additional benefits, you will create a happy, loyal workforce that will want to help your company succeed, and that will help your small business be more productive than ever before.
Many small businesses make the mistake of not offering their employees a 401k retirement plan. However, there are many benefits that providing retirement benefits to their employees can bring to small businesses. Contact us to learn more about the reasons why businesses need to offer their employees a 401k, as well as to learn about setting up a 401k for your business.