- An employee retirement plan is an investment in recruitment, retention, staff morale, and the long-term well-being of your workers.
- 401(k) plans can be cost-effective for companies of any size.
- If you match employee contributions, you can deduct those dollars and lower your tax bill.
Small businesses can afford to offer 401(k) savings plans to their employees
As the owner of a franchise business, you may think you can't afford to offer your employees a retirement savings plan. It may stem from the perception that your company is too small to offer a plan, or you have many business costs already. But if you consider an employee retirement plan as an investment in recruitment, retention, staff morale, and the long-term well-being of your workers, it can be a smart move. Today, 401(k) plans can be cost-effective for companies of any size, with lower operating costs and bigger advantages for both employers and employees than many other benefits.
You can serve your own interests by offering a retirement savings plan:
- This valued benefit can help attract and retain talent. It also demonstrates that you care about workers' futures.
- A 401(k) defined-contribution plan can bring tax benefits. If you choose to match your workers' contributions — and that's voluntary — those dollars are deductible from your tax bill.
- You can use the retirement savings plan, too. Nearly half of U.S. small-business owners — 47 percent — save less than 10 percent of their income for retirement. And 25 percent don't save anything at all.
Payroll, retirement plan functions dovetail
Savvy small-business owners find that integrating a 401(k) with payroll can streamline the administrative tasks of both. Consider eight reasons to incorporate payroll and 401(k) administration:
- Collection of accurate employee census data – Retirement plan providers usually require complete census data on employees to track eligibility and plan entry dates. Integrating your 401(k) administration with payroll can make this task easier.
- Savings in time and money – Outsourcing your 401(k) administration to your payroll provider frees your staff to focus on core business functions.
- Legal compliance – 401(k) recordkeeping is heavily regulated. National payroll providers are typically staffed with experienced professionals who understand all aspects of tax regulation, data gathering, and fiduciary guidelines.
- Peace of mind – Your employees' money will be deducted and transmitted promptly and securely.
- Less paperwork – Automating the transmission of contributions and the collection of required data can reduce paperwork for your staff.
- Data security – Well-established firms use the latest technology and can handle large volumes of transactions and funds.
- Timely investment of employee contributions – Because the payroll provider already processes workforce funds, it can quickly and easily add the necessary retirement plan deductions.
- Familiarity with your business – Your payroll provider already knows your company and the needs of its workforce, so it's ideally positioned to handle your company's 401(k) administration, as well.
When your payroll and 401(k) plan administration are linked electronically, the programs share information and handle myriad tasks automatically.
Help ensure your franchise employees' financial futures
The United States faces a crisis in retirement savings. Americans aren't good about setting aside funds for their post-work futures: The average couple has put away only $5,000 for retirement. Those who do save mainly use employer-sponsored 401(k) accounts, according to a 2017 report by the Pew Charitable Trusts, but more than 40 percent of full-time workers lack access to one. The U.S. Census Bureau found that just one-third of U.S. workers who have tax-deferred workplace savings plans use them. This is sobering news.
Your business can combat this dismal trend by sponsoring a 401(k) savings plan. A retirement plan integrated with your payroll processing system can reduce paperwork, help you deal with federal fiduciary regulations, and give your franchise a competitive edge in hiring and retention.