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Offering A 401K Fund To Employees

401Ks Aren’t Just For Big Companies

Many small business owners assume that offering 401K plans is something only big companies can afford. However, offering your employees a retirement savings plan can yield some impressive incentives for you as well. Launching this type of savings plan offers your small business significant benefits that should not be ignored.

Why You Should Consider This Type Of Employee Retirement Savings Plan

Having a 401K plan means that you get to participate. You can enroll in the plan and contribute to your fund throughout the year. Everything that you put into your account is deductible from your employer income. Additionally, you are not taxed on employee contributions until they are dispersed to them directly (not including any ROTH contributions).

You get to set the contribution limits of your plan. Your retirement fund advisor will partner with you to understand what makes most sense for your organization. Higher limits enable both you and your staff to save as much as possible during these critical earning years. Also, staff members age 50 and over can further contribute so they can “catch-up” to younger participants. Once again, your advisor will put together a compliant plan for these employees.

As a small business owner there are other incentives to consider with this type of savings plan. Many entrepreneurs find that they can claim a tax credit for the setup costs associated with various retirement plans. The general rule is the claim equal 50% of setup/administration costs and then up to $500 every year for the first three years the plan is implemented.

Partner With An Experienced Retirement Plan Advisor

The most important thing to consider when implementing a savings plan is that you should not have to settle for a one-size-fits all approach. An experienced retirement fund advisor will create a customized savings plan based on your company needs. Your provider should outline the specifics of the 401K strategy as well as include an after-tax Roth component to give you and your employees a personalized final solution.

For more information about offering retirement savings at your small business, contact The Payroll Company today.