A recent survey by the Wells Fargo/Gallup Small Business Index showed that
about 50 percent of small business owners are concerned that they wonít have a sufficient amount of money in savings to retire. If these owners are worried, what about their employees?
They need a comfortable nest egg as well. Helping your employees build a comfortable retirement account can provide direct benefits to your business.
1. Retirement plans help with recruitment.
In the past, pension plans were the norm but in these difficult economic times, they are becoming rarer. Offering a 401K plan will serve as a draw in terms of recruiting top talent.
If an employee has a choice among two offers with similar responsibilities, the chances are that s/he will choose the job that offers a pension plan as part of its benefit package.
In short, 401K plans will attract highly skilled candidates to your firm and perhaps even compensate for a smaller starting salary.
2. Pension plans reduce employee resignations.
The journal Plan Advisor, reports that about 40 percent of small business employees would resign from their current job for a new job that provides a pension plan.
As per an AARP survey, retirement plans count among the top 10 factors in why employees choose to work for a given employer. Offering a pension plan sends the message that your firm cares about its employees,
while also helping your firm remain competitive within its niche by retaining top talent. Employee retention also has a direct impact on your company’s bottom line as it reduces recruiting and training costs.
3. Pension Plans reduce the tax burden of small firms.
If you offer a 401K plan, your business may be eligible for a $500. tax credit during the first three years of the planís existence.
Also a consideration is the tax deductions your firm will be able to take for all contributions it makes to employee pension plans.
Since it is likely that you will be adding to your pension plan as well, you will also save on personal income taxes.
4. 401K plans are easy to arrange and manage.
Current Web-based pension plans for small business owners are easy to set-up and manage.
Utilizing online set-up and management requires little time commitment with little, if any, paperwork.
Employees will also have 24/7 access to their 401K accounts, along with the email and phone number of a retirement advisor.
5. 401K plans help small business owners manage their own retirement savings.
Too often, small business owners focus on growing their business and neglect building a nest egg.
Having a 401K will motivate small business owners to start their own retirement savings.
Even should you start another business, it is simple to rollover your 401K savings into a new account.
6. Pension plans contribute to the overall economy.
By helping employees build a nest egg and retire comfortably, small business owners contribute to building a healthy economy overall by enabling people to have a greater amount of disposable income during their senior years.
Daniela Baker is a small business blogger and helps small business owners compare business credit card offers at CreditDonkey.