Attracting and retaining top talent for your company can be quite the challenge nowadays; especially if you’re a small business owner.
So what could possibly be offered that would attract quality employees besides a nice salary? Two words — RETIREMENT PLAN!
Now I know what you’re thinking. “I’m a small business owner. There’s no way I can even think about offering retirement plan options to my staff.” Not true!
With today’s technology and innovative financial services, the possibilities to offer cost-effective retirement savings plan options are countless.
Before you begin researching retirement plans, take a deeper look with TaxBandits and see how offering a savings plan can benefit you as an employer.
Benefits of Offering a Retirement Savings Plan
Offering a retirement savings plan option in beneficial to both the business owner and employee. Here are the top three benefits of providing retirement savings plans to your employees:
1) Employer contributions are tax deductible
Considered to be the best incentive for business owners and employers; any matching contributions made toward the 401(k) plan of an employee are tax-deductible to the employer.
Employers can also lower their tax liability with the more they contribute towards the savings plan, just like employees.
2) Businesses may receive tax credits and other incentives for starting a retirement plan
Having a retirement plan provides lots of incentives for you, your business, and your employees. By investing in a retirement plan you can save for financial security when you and your employees retire.
Other benefits and incentives include:
- Assets in the plan grow tax-free
- You can choose from flexible plan options
- Retirement Plans Startup Costs Tax Credit
- Tax credits for some of the ordinary and necessary costs of starting a SEP, SIMPLE IRA or qualified plan can be claimed by filing Form 8881, Credit for Small Employer Pension Plan Startup Costs.
The credit is 50% of your ordinary and necessary eligible startup costs up to a maximum of $500 per year and can be claimed for each of the first 3 years of the plan.
3) A retirement plan can attract and may help retain better employees, thus reducing new employee training costs.
Did you know that nearly 55 million workers don’t have an employer-based retirement savings plan?
Most employees in this demographic work for small companies, or are younger workers, minorities, and have a low-to-moderate level of income.
Businesses that offer retirement plans as a part of their benefits package tend to stand out among competitors.
Offering retirement savings plans will also help you attract and keep quality employees on your staff. Think about it; more than likely it would cost more money to lose an employee than it would to simply match a current employees’ 401(k) contributions.
Excessive recruitment (ads, campaigns, etc.), interviewing, and training costs can be avoided through plans like these.
Stages of Sponsoring A Retirement Plan
There are four main stages to providing retirement savings plans to employees:
Begin the process by thinking about retirement ahead of time and learn about the ways that money can be set aside for retirement purposes. Once you’ve assessed the various options, choose the right plan for you and your employees.
After selecting the appropriate retirement plan, take the necessary steps to put your plan in place. This can be done in different ways, depending on the plan you choose:
- adopting a written plan;
- arranging a fund for the plan’s assets;
- notifying eligible employees about the terms of the plan; and
- developing a recordkeeping system.
Structure and operate retirement savings plans where assets that are included in the plan continue to grow and tax benefits are preserved.
Basic steps to effectively operate the plan annually include:
- covering eligible employees;
- making contributions;
- keeping the plan up-to-date with retirement plan laws;
- managing the plan assets;
- providing information to employees participating in the plan; and
- distributing benefits.
When the time comes that the selected retirement savings plan no longer meets the needs of your business, simply close out the plan and notify the appropriate parties.
Make The Best Choice For Your Business
To be honest, establishing and offering a retirement savings plan is a win-win situation for employers and employees.
When you offer retirement plans to employees you can receive access to better plans for yourself and benefits such as reduced tax liabilities, employee retention, and personal retirement planning for employers.
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