Four Reasons Your Small Business Should Offer a 401(k)Submitted by MIRUS Financial Partners on April 18th, 2018
Any business that’s been around for more than a decade knows that it used to be complicated and time intensive to maintain a 401(k) for employees. However, according to a recent report from Capital One, 94% of small business owners who offer a 401(k) plan to employees report that this employee benefit is a factor in recruiting and employee loyalty. 401(k)s have become a standard offering for many businesses today.
If your small business hasn’t started offering a 401(k), now is a great time to start. Here are four reasons why it’s an excellent time for your company to begin this popular employee benefit.
1. 401(k)s Have Become Much Easier to Set Up and Maintain
For some small businesses, offering a 401(k) used to be challenging because administration resources were limited. However, recent changes in technology and automation have dramatically reduced the time needed to administer and maintain retirement accounts. That same technology now empowers the individuals you employ to access their accounts directly, without the help of company HR or accounting personnel. That means that even small businesses with lean administration staffs can now offer this valuable benefit to employees.
Most retirement plans are also designed to be easy to set-up, which means you won’t have to dedicate long hours towards preparation. Many retirement plan providers also offer an automated process for handling administrative tasks, which keeps your team free to work on other priorities.
2. A 401(k) Offers Potential Tax Advantages for Your Small Business
Business owners may be eligible for tax credits of up to $500 for each of the first three years of the plan, to cover startup costs. Most businesses will also qualify for tax deductions if you’re planning to offer an employer matching contribution. Participants in the plan, including owners, who make pre-tax 401(k) deferrals lower their taxable income and may be eligible for a tax credit. Every business is different, so consult with your tax advisor to find out exactly how your business might benefit, and get the IRS’s complete overview of potential tax benefits here.
3. A 401(k) Helps Attract and Retain Employees
Employees look for many things when considering a new job. Salary is not the only factor in consideration. Healthcare and retirement plans are also a key part of the decision making process. According to a Met Life survey in 2016, 70% of employees consider a 401(k) plan or other retirement plan a “must have” benefit. If your small business can offer a well-designed retirement plan, you’ll be better positioned to attract and retain motivated and productive workers.
4. A 401(k) Plan can Help Increase Employee Morale and Productivity
Keeping your employees happy is an essential part of maximizing productivity. When your workforce feels they have access to a well-rounded benefits package, your company morale and productivity is likely to increase.
Employer-managed retirement plans can also help reduce financial stress for your employees, and can actually make the people you employ more productive at work. In fact, nearly one-third of all employees report being distracted by personal financial issues while at work. Companies that offer a 401(k) plan can relieve some financial stress, helping the individuals that work for you prepare for the future.
Is a 401(k) right for your business? MIRUS Financial Partners can help you evaluate the potential benefits to your company, and help you understand what impact the implementation of a 401(k) plan will have on your administrative staff. Contact MIRUS Financial Partners today to find out more.
Mark A. Vergenes is President of MIRUS Financial Partners, 110 E. King St., Lancaster, PA; 717-509-4521 or firstname.lastname@example.org and is an Investment Advisor Representative offering securities and advisory services offered through Cetera Advisor Networks LLC., member FINRA/SIPC. Cetera is under separate ownership from any other named entity. Neither MIRUS Financial Partners nor Cetera Advisor Networks LLC. give tax or legal advice.