Should Your Business Offer a Retirement Plan Benefit? Here’s What to Ask Yourself
Retirement benefits are among the best known and most desirable employee benefits offered. So why don’t more businesses offer them? First, of course, not all tools are right for every situation.
But there also can be a lot of misunderstanding about complex company-sponsored benefits, and sometimes a hesitation by owners who are leery of getting in over their head or who aren’t sure if the effort will be worth it. If you like the idea of offering retirement benefits but aren’t sure where to start, ask yourself:
Will it provide a recruiting or retention edge, and what is that worth?
In a tight labor market, many businesses struggle to hire and keep good people. A retirement plan can help you stand out from the competition or keep an employee from walking (especially with options like vesting that reward longevity.) Depending how hard it is for you to find good people, this could tip the scales.
How will a retirement benefit affect my bottom line?
Nothing in life is free, but some things are a better value. That goes for retirement plans too. Your business could benefit from tax advantages the government offers to encourage more employers to offer retirement benefits. And business contributions to employee retirement are tax-advantaged, which can help your business come tax time.
What kind of plan makes the most sense for my business?
401k, SIMPLE IRA, SEP – it’s a regular alphabet soup. But behind all those acronyms and numbers, each option offers unique features, benefits and opportunities, more than can be shared in a few words. Talk to an expert who can help you understand, unravel and evaluate all your options, which are probably more extensive than you realize.
What will it take to offer and manage a plan?
You’ve got a lot on your plate, so figure out how a retirement plan fits. Maybe your business has a person who can manage the plan, or maybe they’ll need training. Do you run everything yourself? A benefits partner can handle administration, communications, enrollment and support for a reasonable cost.
There are lots of reasons to offer retirement benefits, not least because it helps employees you care about prepare a solid future for themselves. With the right guidance, you may find that offering a retirement plan makes more sense than you would expect.