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. Maybe that's why 401(k)s have become a standard offering for many businesses today.

If your company hasn’t started offering a 401(k), now might be a great time to start. Here are some reasons to consider this popular employee benefit for your firm. 

1. 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 staff 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. Potential Tax Advantages 

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 organizations 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 company is different, so consult with your tax advisor to find out exactly how your firm might benefit, and get the IRS’s complete overview of potential tax benefits here.

3. Employer Retirement Plans Helps Attract and Retain Employees

It's harder than ever to recruit new employees, and salary is not the only factor in consideration. Healthcare, retirement plans, and work/life balance are also key parts of the decision-making process. According to a Met Life survey in 2016, 70% of employees consider a 401(k) plan or other retirement plans 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. 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 are 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 us today to find out more.