As a business owner, you want what is best for your company. To find the greatest degree of success, you need to attract the best employees you can. Offering a retirement plan helps you do exactly that. Offering retirement plans opens up the opportunity for tax credits as well. While the benefits are great, there are some things you should know before you get your plan set up.
Costs
Cost is always a concern for businesses. After all, you have to control your costs if you want to maximize your profits. How much it costs to set up a retirement plan like a 401(k) plan depends on the size of your business and the benefits you choose.
Set-up costs may range from a few hundred to a few thousand dollars in addition to maintenance costs, the cost of consultations, and fees for rolling over assets from other plans. Keep in mind that some of those costs may be offset with tax credits you can take advantage of because you offer a retirement plan.
Regulations and Compliance
You can’t say you’re offering a retirement plan and just be done with it. You have to follow the laws and regulations that govern 401(k) retirement plans. It’s easier to stay compliant with them if you know what they are, so take time to learn about them before you roll out your plan.
Non-discrimination is a key test for most, but not all retirement plans. A safe harbor plan lets you bypass non-discrimination testing in your 401(k) plan.
How to Set It Up
When you’re ready to set up your retirement plan, start by creating a 401(k) plan document that outlines the details of your plan and its IRS compliance. Next, set up a trust to hold plan assets. As employees contribute money to their accounts, keep detailed records of their contributions, account values, and any contribution matching you do. Make sure you provide any participants with the benefits, rights, and features of the plan you offer, a summary of the plan description, and updates on investments and changes.
Offering the right benefits makes a huge difference in the caliber of employees you attract and their willingness to stick around. If you don’t already offer a retirement plan, take a look at what it would take to offer one to your employees. It’s not easy to set aside money for retirement, but having an employer-sponsored retirement plan makes it simpler, something your employees will appreciate.
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