Does your company offer an employee retirement plan as part of the compensation package? If not, you might want to consider offering one. According to a 2016 Gallup poll, 64 percent of Americans are very or moderately worried that they won't have enough money for retirement, and Glassdoor reveals that 31 percent of U.S. employees would rather have retirement benefits than a raise. If you're thinking about offering this attractive benefit, here are four things to keep in mind.
1. Not All Retirement Plans Are the Same
The three basic types of retirement plans are the simplified employee pension (SEP), the SIMPLE (savings incentive match plan for employees) IRA plan and the 401(k) plan. As you research the different options, you'll want to consider your company's size and the tax impacts for your business and your employees.
2. Clear Communication About Retirement Benefits Is Essential
Once you choose a plan, be sure to set aside time to provide information to your employees and answer any questions they may have. Retirement may seem a long way off for some employees, particularly millennials, and those who are new to retirement saving might need some additional context to appreciate the long-term cost of retirement. Using visual data and infographics may help all your employees understand the importance of saving for retirement and better communicate the value of the retirement benefits you've chosen to offer.
3. A Retirement Plan Can Benefit Your Bottom Line
Let's use the 401(k) as an example here: You may already know that your employees can gain certain tax breaks when your business sponsors a 401(k) retirement savings plan because it allows them to invest a portion of their pretax earnings. But did you know that, according to the Internal Revenue Service (IRS), small and midsized businesses are entitled to a tax deduction for contributions to employees' accounts?
Having a solid understanding of the importance of retirement benefits for both your company and your employees can help equip you to make more informed decisions when you implement your plan.
4. Retirement Plans Can Help Attract and Retain Talent
Still not convinced that your small business should consider offering retirement benefits? Have you thought about how a great retirement plan might help you attain your dream team?
In a recent Pew focus group of small and midsized employers, most agreed that a retirement plan helps attract and retain talent — some even felt that offering a plan is a company's fundamental responsibility and a reflection of company values.
A benefit that gives employees a sense of security and hope for the future is not only a reason for job candidates to choose you as an employer, but it may also help you retain employees in the long term.
Retirement plans can be a win-win for everyone involved. Weigh your options and implement what's best for both your employees and your business.
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