Choosing a 401(k) Plan for Small to Medium-Sized Businesses

If you do not offer a 401(k) plan to your employees, it could be hurting your business.

Employees expect the “big three” core benefits – health insurance, paid time off and a retirement assistance plan – to be available no matter where they work. In a recent MetLife study, 60% of respondents said that a 401(k) program (or similar) was a “must-have” benefit.

The benefits of offering a retirement program are significant and, even if you offer matching contributions, you may discover that your company comes out money ahead – especially if you use a PEO to administer your plan.

Retirement plans

Why You Need to Offer a 401(k) or Another Retirement Plan

As you can see, the majority of employees want to work for companies that offer a retirement plan. Financial stress about the future is one of the most commonly cited concerns in the MetLife study referenced above and, when you can help reduce those fears, employees become happier, more engaged and more productive on the job.

You may be able to lower your payroll costs by adding this benefit to your current offerings. In fact, many employers find that they can reduce the amount of compensation they offer employees if they increase the type and level of benefits they offer.

Business owners can also take advantage of this benefit to save for their own retirement. This is especially important because few small business owners have a viable financial strategy in place for their own retirement.

Why You Consider Matching Employee 401(k) Contributions

For most businesses, the tax advantages of providing matching contributions are significant – usually significant enough to offset the contributions themselves.

You should, of course, consult a tax attorney or CPA to explore your options and the potential benefits. However, the U.S. tax code is designed to substantially reward companies that help employees plan for a more secure future.

You will attract and retain higher level employees if you offer to match their contributions (up to a reasonable level – typically around 3%). And, if you have the right small business-savvy tax professional, you may discover that matching funds is financially beneficial as well.

Choosing the Right Retirement Plan for Your Business

As a busy entrepreneur and small business owner, you are forced to become an expert on a variety of topics. However, the complexity of 401(k) plans, individual retirement accounts (IRAs) and other retirement assistance benefit programs makes it difficult to navigate without the assistance of an expert.

If you outsource your payroll and human resources functions to a PEO, you don’t have to become an expert on retirement plans to figure out which one is right for you. Your PEO team can outline your options and explain the pros and cons of each type of plans.

But perhaps the best part about working with a PEO is that they administer your retirement benefits for you, along with handling payroll, hiring, onboarding, training and related functions.

WTA, Inc. serves small and medium-sized companies in Salt Lake City and the surrounding areas of northern Utah. Our value-added services, including workers compensation administration and employer liability management, actually save our clients money in most cases, as compared to handling these functions in-house. Contact us today to learn more about how we can assist you through the administration of your employee retirement benefits plan.