As your business grows and your workforce becomes dedicated and driven, you might want to consider the types of business retirement plans that you could set up. A retirement plan contribution is an excellent way to reward and recognize employees for their hard work and dedication to your small business. Offering retirement plans also features many benefits for small business owners. Here are some of the unique business retirement plans available and the benefits associated with offering retirement plans.
Defined Contribution Plans
Defined Contribution Plans are appropriate for employers with one or more employees. There are several different types, but the basic principle is that a financial institution will create a customized plan for employers and employees to contribute to business retirement plans. This is a formal plan that must be applied to all qualifying employees in the organization.
There are varying models for retirement plan contributions to be made by the employer. Generally, defined contribution plans allow an employer to determine the exact amount that will be contributed on an annual basis. This simplifies budgeting practices for small business owners looking at offering retirement plans. It will be necessary to consult with a financial institution in order to implement a defined contribution plan.
An Alternative Solution – Payroll Deduction IRAs
If your small business is not yet ready to start offering retirement plans to employees, there is another simple solution. Your payroll department can set up an option for employees to contribute to an IRA through automatic deductions. This means that your business will not be participating in matching contributions, but employees can still work toward financial security by contributing independently. Payroll deduction IRAs are very easy to set up, and they are a low-cost alternative to offering retirement plans to employees.
Benefits of Offering Retirement Plans
The most obvious benefit associated with offering retirement plans to employees is that it makes your business eligible for certain tax breaks. All retirement plan contributions made by employers are tax deductible, which can save a small business a great deal when it comes time to pay taxes. There are also several incentive programs associated with offering retirement plans, and small businesses may enjoy other types of tax credits.
Aside from the dollars and cents issues, business retirement plans can be valuable to companies in other ways. For example, if your small business features business retirement plans and intends to make retirement plan contributions, it may improve the caliber of employees that you attract and increase retention rates. This will lead to an improvement in the overall performance of your workforce while reducing the costs associated with hiring and training new employees.
There are obvious benefits for offering retirement plans to your employees. Explore the myriad of business retirement plans available with a trusted financial advisor, and consider taking a poll of trusted employees in your organization before implementing a program. The long-term benefits of offering retirement plans for your company and your employees are invaluable.
