Clearly, your employees are winners when you sponsor a retirement plan. But there are advantages for you, too.
A few decades ago, many employees could look forward to comfortable retirements. Interest rates on savings vehicles were high. Pensions were well-funded. The economy hummed along.
Today's retirement scenarios for a good portion of the population are not as rosy. Rates on savings accounts, CDs, government bonds and other interest-bearing accounts are dismal. Pension funds are struggling. And while there are positive signs of recovery, the U.S. economy has just been through the ringer.
As an employer, you can't do anything about these unpleasant realities. But both you and your employees do stand to gain if you provide an employer-sponsored retirement plan.
As the economy continues to improve, it's still likely that employees who have to wait years or decades before leaving the workforce will not be as financially secure as their parents. So individual retirement planning is absolutely critical.
By offering an employee retirement plan, you'll be providing one of the pieces in that fiscal road-map for the future. Both you and your employees benefit in numerous ways, including these:
- Tax savings. Your contributions -- as well as those of your employees -- are often tax-deductible.
- Rapid growth of wealth. Because of this tax-free compounding, savings will grow faster.
- Tax credits. You as an employer may be eligible for a tax credit for the expenses involved in launching a retirement plan.
- Fewer staffing problems. An employee retirement plan can be another positive element of your company's total benefits package. And the most desirable employees expect financial "extras" from employers. So you will likely attract a higher caliber of applicants.
Considering all of the affordable options that are available, your company will be able to select the plan(s) that meets your expectations, your budget and your employees' needs. There are the familiar (Traditional and Roth IRAs, 401(k)s and 403(b)s and Employee Stock Ownership Plans (ESOPs), as well as the less common, like 409A Non-Qualified Deferred Compensation Plans, IRC 457 (b) Deferred Compensation Plans and Money Purchase Plans.
Each, of course, has its own requirements and regulations, and launching one can be a complex process which must be completed with absolute accuracy. We've dealt with these plans -- and, certainly, the IRS -- before, and we'd be happy to help get you started.
Beyond all of the benefits already discussed here, offering an employee retirement plan can be an inexpensive, fruitful way to build goodwill around your company. These days, that's worth a great deal.
To get the full information, contact your tax accountant or financial adviser.