You care about your employees.
Their professional growth.
Their life outside of work.
How do they know you care? You provide benefits that matter to them.
When starting or managing a business, you want employees who embrace your vision, work hard, innovate and help grow the company. Sounds great, right? It’s really hard to find those people.
The truth is, without the right benefits package, those employees won’t join or won’t stay long. They are lured away by companies offering them benefits that provide some long-term security.
Take a step back and really think about what your company values and how to reinforce those values. Offering a 401(k) shows you’re dedicated to your employees now and in the future. You recognize the value of their contributions last beyond their tenure. Historically cost prohibitive for small and medium-sized companies, retirement benefits are now affordable and actually benefit you as an employer.
How does offering a 401(k) benefit an employer?
Easier to recruit and retain talent
After the subprime mortgage crisis of 2008, the demand for retirement benefits has grown to the point where it is now expected. As a highly coveted benefit, offering a 401(k) gives you an advantage when recruiting and retaining employees.
Improved employee satisfaction
Helping employees prepare for a secure retirement can help them feel more engaged when supporting the company’s success. With a more secure financial future, it’s one less thing for employees to worry about.
You have the option to make 401(k) contributions on behalf of employees if target business goals are achieved. These contributions don’t have to be linked to performance, but it’s a great tool to help motivate employees and build your business.
401(k) employer tax benefits
Lower your tax burden by offering a 401(k). Voluntary employer contributions are not subject to federal, state and payroll taxes. Plus, employer matching is 100 percent tax deductible.
Are employers required to match 401(k) contributions?
Employees are certainly motivated to perform better when there’s a monetary incentive. If offering an employer match is holding you back from setting up a retirement benefit, however, think again. First of all, it is not required by law. Secondly, there are flexible options that may work for your company:
• No match – You can start a 401(k) plan without a match and add it later. In fact, 49% of employers with 401(k) plans match 0%.
• Discretionary match – Start low and adjust the match rate as business allows. It’s easy to increase over time but be aware that reducing a match rate can hurt morale. To give you an idea, a typical employer match is 50% of deferrals up to 6% of compensation.
• Nonelective contributions – If profits aren’t consistent, only share when the company does well. This gives you flexibility to offer either a percentage of their salary or lump sum.
Historical barriers for small and medium-sized companies wanting to offer a 401(k) are eliminated when they partner with a professional employer organization (PEO). As a PEO client, you become part of a large pool of PEO clients when you outsource your HR to their experts. They handle the administrative and legal work required to set it all up.
As a leading CPEO in Illinois (certified professional employer organization), MidwestHR waives the typical set-up fee and yearly administration costs for our clients who offer 401(k). Our clients recognize offering 401(k) to employees is mutually beneficial, so we do whatever we can to make it easy and affordable to include in your benefits package. We’d love to chat with you further about this win-win opportunity. Give us a call at 630-836-3000 to learn more.