For a majority of people, a 401(k) retirement savings plan can be a financial security blanket. These funds have the ability to give individuals peace of mind knowing a comfortable retirement is ahead of them. In today’s world, retirement planning and savings can be one of the most sought-after benefits for employees.
By offering a 401(k), employers are giving their employees a shot at a financially stable future. But, for some growing businesses, a 401(k) is much easier said than done. It can be a big ask when there is already so much to be done. A 401(k) can be a “win-win” situation for both employers and employees due to the following four reasons.
It Serves the Needs of Your Employees.
Whether it be the administrative work, problem-solving, or making sure customers remain happy; employees are what makes a business go on a daily basis. By offering them a 401(k), employers are giving them the keys to the financial security they deserve. In addition to benefiting employees in the future, 401(k) plans can also benefit your employees right away. Since contributions are usually pre-tax, anything a participant contributes to the plan reduces their taxable income. This means employees will pay less in taxes for that year – a “win-win.”
This sense of financial security can also lead to more efficient and effective work by all. Creating a workplace that feels secure and makes employees happy can lead to a more productive and growth-producing business. Employees who know they are taken care of are more likely to buy into the goals and mission of the company.
In addition to demonstrating appreciation, a 401(k) may also help attract top candidates to your business. Retirement plans are a benefit that employees are looking for when exploring job opportunities. Offering this benefit may help to reduce turnover and level the playing field with larger business’ by attracting great candidates.
Tax Deductions for Employers
The financial responsibility of starting a 401(k) plan can be the biggest hurdle preventing growing businesses from offering this benefit. Luckily, there are tax credits that can help overcome this obstacle. Eligible growing businesses can claim tax credits up to $1,500 to help with the initial startup costs of a 401(k) (IRS).
This isn’t the only tax break for employers regarding a 401(k); once the plan is up and running, business owners receive tax deductions for contributions to employee retirement accounts. Additionally, when businesses are taxed regarding the 401(k), it is with the income tax rate instead of the capital gains rate, which tends to rule in the employer’s favor. All of these tax breaks help to set growing businesses up for success all while they serve the needs of their employees.
Technology can Make it Easier than You Think.
Now more than ever we are seeing the power of technology, and this holds true even with 401(k) plans. The thought of starting a 401(k) plan can create a lot of stress on employers because of the additional work involved. To take that pressure off, outsourcing to financial service companies could be a great option for growing businesses. There are a multitude of outsourcing opportunities that take the workload off of the employer so they do not have to deal with the responsibility and daily administrative work.
Many low-cost plan options are available for growing businesses to look into to ensure their employees are receiving this sought-after benefit. Sort through all of your options and find a plan that fits well for your business.
Additionally, technology can allow employees to have easy access to their accounts. This gives them even greater control over their financial future and ease of access to account information. These are prime examples of how technology lends a helping hand as businesses look into implementing a 401(k) plan.
It is a Reward for Hard Work by All.
When discussing the perks of the 401(k) plan, it is easy to stay focused on how it helps the employees within the growing business. However, the financial future of the owner is just as important. Owners of growing businesses put in a lot of hard work to ensure the company remains successful and should have access to a comfortable retirement as well. Implementing a 401(k) means investing in the future of your business, your valued employees, and yourself.
Businesses of all sizes should consider these benefits when looking into a 401(k) plan. There are limitless options available that make getting started easy and efficient for business owners. If employees are curious, it may be time to do some research. With a 401(k) plan in place, everyone wins – the business, the employees and you, the business owner.
Contact Focus OneSource today if you are interested in learning more about how offering a 401(k) plan could help your business!