First of all, what you are considering is, in most cases, a really great idea. There are lots of reasons why a 401(k) is a real asset both to you and your employees. Here are just a few reasons why we like this plan.
A well-designed and well-managed 401(k) plan is a great way to attract and retain quality employees. Employee retention is an important strategy for a business that wants to succeed and grow. Not only that, but attrition costs are high. Some estimate that the loss of an employee ends up costing a business 6 to 9 months of that employee’s salary. There are not many businesses that can absorb that cost very many times.
Basically, 401(k) plans allow employees to save for retirement and plan for a stable future. Helping your employees save for retirement boosts the financial security of your staff. This can help to make employees feel more motivated and settled at work. Happy employees are generally more productive. Offering 401(K) plans makes it easier to recruit new qualified staff members as you scale your business.
These plans are not taxed as income until withdrawn. Named after the relevant tax code, a 401(k) is a way for your business’ employees to put part of their salary into a retirement savings plan where it’s invested. Usually this money isn’t taxed as income now, and instead, the tax is paid when they withdraw the money later in life. Plans that work the other way around are known as Roth 401(k).
The most common way to set up a 401(k) is to allow employees to put portions of their salary into a 401(k) and then many employers will offer to match the amount with an additional payment. Usually, this money can’t be withdrawn until the employee has been with the company for a certain period of time, so it’s an effective way to retain staff.
If you’re interested in offering your business’ employees a competitive 401(k) package, our employee benefits experts can walk you through your options.
We’ll help design a 401(k) plan that gives your business a competitive edge.