Why Small Business Employees Need a Retirement Plan

If you run a small business, you are undoubtedly on the hunt for ways to attract and retain quality workers. Especially in an era where labor is in short supply, it’s more important than ever that small businesses make their company stand out amongst the masses.

One of the best ways to attract quality employees who are in it for the long run, is to offer a great retirement package.

Benefits of Having a Retirement Plan for a Small Business

Now, more than ever, the future seems very uncertain. Many workers, but especially young workers, are worried about what’s to come. They aren’t sure what the world will look like in ten years, let alone 30 years when they retire.

For this reason, small business employers can give these workers peace of mind about the future by offering plans that give them confidence that their financial interests will be protected.

Different Types of Retirement Plans

While there are many options for retirement plans, the most common are the following:

  • The SEP Plan.

Perhaps the simplest retirement planning option for small businesses is the Simplified Employee Pension Plan (SEP). This plan works by relying completely on employer contributions. With an SEP plan, employers can choose to decide each year how much they will contribute to employee plans or whether or not they will contribute at all.

This plan works well for those who are self-employed but can also be effectively used by small businesses who have multiple employees.

  • The SIMPLE IRA Plan.

The Savings Incentive Match Plan for Employees is an Individualized Retirement Account that is very easy to maintain. Specifically, the SIMPLE IRA has no tests that are required to ensure fairness. In return, however, the contribution limits for this type of plan are lower than they are for 401k plans. Additionally, SIMPLE IRAs can only be used by companies with less than 100 employees.

For this reason, and a few others, the SIMPLE IRA is not a good option for self-employed individuals who run a solo operation.

  • The 401k Plan.

401k plans offer many different options to small businesses. For this reason, they are often very attractive for both employers and employees. They allow for high contribution maximums and different means of paying taxes on retirement funds.

However, 401k plans require yearly testing which can be very time consuming and employers are subject to penalties if they fail to maintain a plan that follows the regulatory requirements.

Ready to Start a Retirement Plan for Your Small Business?

There’s no doubt about it, small businesses need to consider offering retirement planning, if they don’t already. The highly competitive job market necessitates that businesses do everything they can to help employees thrive and to encourage them to stay with the company for many years to come.

If you are interested in starting a retirement plan for your employees, contact a plan provider like Ubiquity now! The process is simple and easy to get started, and your plan provider will ensure that you have all the tools you need. Call today!

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