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Workplace Retirement Refinement

A Workplace Retirement Plan is Good for Your Employees, Your Business – and You

December 6, 2017

Helping workers succeed at planning and saving for a secure retirement is good for them. Workplace retirement plans can help them build savings, reduce financial stress, and be prepared to retire when they are ready. It’s also good for employers – many find financial benefits help attract talent, improve productivity, boost loyalty, and foster healthy turnover.

Retirement plans also offer big benefits for business owners – the ability to save for their own retirement and capitalize on the tax breaks that these plans offer. There’s more good news: today’s retirement plans are attainable at a reasonable cost and can be designed to help simplify plan management.

When it comes to attracting and retaining talent, a retirement plan can help a small business stand out from the competition. Less than 20 percent of private sector firms with less than 100 employees currently offer a retirement plan, according to a Retirement Insights analysis of 5500 reporting.

Benefit from the tax savings retirement plans offer

A workplace retirement plan can help you reduce taxes, and their tax advantages can make them quite affordable. Here are some compelling reasons for making a retirement plan part of your employee benefits package:

  • Save a substantial amount for your retirement. Retirement plans offer you and your employees the opportunity to save a substantial amount for the future in combined employer and employee contributions – almost $60,000 annually.
  • Reduce taxes with pre-tax contributions. You can save with before-tax dollars, which can reduce your taxable income and save on your federal income taxes.
  • Get business tax credits. Retirement plan benefits can be more affordable with a business tax credit. This credit of up to $500 each year for the first three plan years can be applied to plan startup expenses.

Receive employer contributions and deduct the expense

When your business makes employer contributions, not only are you qualified to receive them, but the contributions are also tax-deductible as a business expense (for companies with fewer than 100 employees).

Design a plan that fits your needs

With some upfront planning, you can simplify your retirement plan administration and limit your fiduciary liability.

  • You can design a plan that helps you fulfill administrative obligations. For example, safe harbor plans, which require a mandatory employer contribution, will pass 401(k) plan testing when plan requirements are met.
  • Automatic plan features, like automatic enrollment, can simplify the enrollment process for you and your employees. This feature automatically enrolls participants in the plan upon eligibility, and participants can opt out of participation if they choose.
  • You may also want to consider delegating certain plan functions that you may not have the time or expertise to manage yourself, such as selecting and monitoring of plan investments.

Retirement plan benefits are a smart way to promote your business goals while also helping your employees – and yourself – get retirement ready.

About the Author

John Guido, Principal at Retirement Insights, LLC

Retirement Insights, LLC is a data research firm dedicated to assisting financial services companies to competitively position their products in the marketplace and achieve their goals. We offer powerful competitive intelligence tools, reporting and consulting services specialized in the retirement and financial industries. Our expertise lies in connecting our innovative research and information with insights that help our clients make better decisions and bring practical, actionable solutions into view.

This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.