If you operate a small business, offering a retirement plan can help you attract and retain qualified employees. Even if your company has a workforce of 10 or fewer employees, you can offer them the opportunity to participate in a retirement plan. It’s important to understand the various types of plans that are available and the costs and requirements associated with each so you can decide which would best suit your business and your workers.
IRA
An IRA (individual retirement account) can allow workers to save money on a regular basis and invest it so it can grow over time. Your business can offer to let employees have a portion of their earnings automatically directed to an IRA each pay period. Making contributions automatic is convenient for employees, and it can also help them avoid the temptation to spend money now, rather than invest it for their future.
If your company offers a SEP IRA, the business can make contributions to workers’ plans. If you choose a SIMPLE IRA, both the company and employees will be able to contribute.
401(k)
Employers of all sizes can offer a 401(k) to their workers. With that type of plan, employees can contribute a percentage of their income to their retirement account each pay period.
The business can also offer a match, up to a specified percentage of the employee’s income. For example, if a company offers a 5% match, it will contribute 5% of a worker’s earnings, as long as the employee also contributes 5%.
This feature is popular among employees because it allows them to quickly build up their retirement savings. If your business offers a 401(k) with a match, that can help you draw and keep qualified workers.
Benefits and Requirements for Employers
If you offer one or more retirement options to your employees, your business may enjoy tax advantages. You may be able to deduct the company’s contributions from its annual income.
Some types of plans have annual filing requirements. If you decide to offer a plan with such requirements, you’ll have to be sure that you submit the appropriate forms accurately and on time.
Figure out Which Retirement Plan Is Right for Your Business
DOAAR can help you decide which type of retirement account to offer to your employees. We can explain the pros and cons of various types of plans and how each option could impact your company in terms of cost, tax benefits, filing requirements, and the ability to attract and retain a skilled workforce. Once you’ve decided which retirement plan to offer, we can help you get started.
Contact us today to learn more.