Fringe Benefits

401k Retirement Accounts

Ella Baker
401k Retirement Accounts
Reading time 5 Mins
Published on Jul 2
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Give your business an edge

The traditional 401k plan is the most popular employer-sponsored defined contribution plans available to many companies. Every contribution that the employee makes to their 401k plan entitles them to a tax deduction. 401k plans are a convenient and easy way for your employees to save for their retirement. Contributions to an employee’s plan are automatically deducted from their paycheck and deposited into their retirement account, making 401k plans a conducive component to the success of an employee’s retirement goals. Additionally, offering a 401k retirement plan gives your business an edge in employee recruitment and retention, offers significant tax advantages for both your company and your employees, and helps secure your and your employee’s retirement.

Recruitment

With companies competing for top talent, offering a full suite of benefits that includes a 401k can help give you an advantage over your competitors. The ease and convenience of participating in a 401k can be used to help you attract candidates who want minimal hassle from their retirement plan. Features like automatic enrollment and automated payroll deductions allows your employees to save for their futures without much interruption.

With more employees looking for benefits packages in addition to compensation, the right 401k plan can mean the difference between landing a top candidate or getting turned down. With employees frequently citing retirement options as one of the primary benefits they seek when deciding where to work, offering a 401k plan can contribute to higher work satisfaction, help you reduce turnover, and even help your business make more money. Providing for the long-term future of your employees by offering a 401k plan demonstrates a commitment to your employees that can help you land qualified talent.

Retention

Your company’s 401k plan can not only help you land top talent, but also to retain those new employees long-term. With the National Institute on Retirement Security reporting that millennials are already falling far short in retirement planning and that women are 80 percent more likely to be impoverished in retirement than men, 401k plans can help your company retain a more culturally, racially, age, and gender diverse workforce while benefitting your employees future retirement plans.

By offering a 401k plan as party of your benefits package, you can stand out among your competitors. This additional benefit can go a long way in building loyalty and retaining your employees. Employees are typically less willing to give up jobs that offer great benefits, and a recent report found that nearly 40 percent of workers have reported that they would leave their current job for one that offers a 401k plan. Additionally, 401k plans are one of the top 5 benefits employees value more than a raise. Still on the fence about offering a 401k plan? Remember, it is likely to cost you more to recruitment, hire, and train a new employee than it will to match 401k plan contributions.

Tax advantages

A big selling point of 401k plans is the reduction in tax liability – for both your employees and your business. Just as employees can lower their liability by contributing more money to their 401k, so can employers that match employee contributions.

Your employees will find that the portion of their wages subject to federal income tax is lower because of their 401k plan contributions. Contributions also reduce the amount of your employees’ income tax withholding. Since federal income tax withholding is based on expected taxable income and contributing to your 401k lowers your taxable income, your employee’s will actually have an increase in their take-home pay each pay period.

The matching dollars that your company contributes to your employees’ plans reduce your company’s tax liability. Contributing to your employee’s retirement savings helps lower your overall corporate tax bill. This is a win-win for both your company and your employees year after year.

Plan for everyone’s retirement

Owning a business is an adventure – one that can be littered with perils and unknowns. So, don’t be caught off-guard when it comes to your own retirement – as the owner of a small to mid-size business, you can participate in the same 401k plan that you offer to your employees.

By prioritizing the retirement savings of both yourself and your employees throughout your working lives, you are ensuring that everyone is rewarded in the end. Retirement savings are meant to help secure the future – both your employees and yours.

Let the Sheakley team help

The edge given to your small or mid-size business by including a 401k plan in your benefits package is invaluable. Offering 401k benefits to your employees doesn’t have to be a complicated or overly expensive venture for your business. Sheakley Retirement experts can help you select the right 401k plan for your employees and your business.

Schedule your free consultation with Sheakley Retirement professionals today. Stay up-to-date on all things Sheakley by subscribing to our blog and following us on social media. Join in the discussion by commenting below.


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