A retirement plan is one of the best benefits you can offer an employee.
Not only is it vital to have a recurring stream of income after you retire, but a retirement plan can provide additional benefits for a small business owner as well. Here are a few reasons why you might consider offering a retirement plan:
- Attract Talent
Every great business is supported by great employees. Highly skilled job seekers are typically looking for a desirable 401(k) program as a part of their benefits package. Having a retirement plan can attract talented individuals. It’s an incentive for someone to join your team and help build your company’s brand.
- Employee Retention
Losing a top employee can be detrimental and very expensive considering the cost of hiring and training. A competitive retirement plan can minimize your company’s turnover rate and keep a talented employee from looking elsewhere. Many employees desire a secure future and want to work hard to achieve it. It also makes an employee feel more appreciated by their employer, knowing that the company is looking out for them long-term.
- Ensure Long-term Financial Security for Employers
The opportunity to build a nest egg is a huge draw and a retirement plan is the best way to build long-term wealth. A retirement plan puts you in control of your future, so you won’t have to depend solely on social security. It is an affordable option and company matches can make a plan even more beneficial. Saving is automatic, which means the money is taken from your paycheck before you have a chance to spend it.
- Tax Benefits
This is a big advantage for business owners! The tax savings of offering a retirement alone can help business owners keep more of their own money instead of giving so much away to Uncle Sam. The Internal Revenue Service says employer contributions are deductible on the company’s federal income tax return to the extent the contributions don’t exceed certain limitations according to code. We recommend seeking the advice of a tax professional to see if the tax benefits of offering a retirement plan would be a benefit to you!
Sources: RMI-Solutions & Forbes