The Top 10 Reasons to Offer a Retirement Plan to Your Employees

As a business owner or executive, you want to attract and retain top talent, and one of the best ways to do this is by offering a retirement plan. Not only do retirement plans help employees save for their future, but they can also provide significant benefits to your business. Here are the top 10 reasons to offer a retirement plan to your employees:

 1.     Tax Benefits: Both employers and employees can enjoy tax benefits when contributing to a retirement plan. Employer contributions may be tax-deductible. Employee contributions may be made on a pre-tax basis, reducing taxable income. Alternatively, by using Roth contributions, they can pay taxes now to manage a tax circumstance in retirement. Additionally, under the newer SECURE 2.0 provisions there may be a tax credit for establishing a new plan.

 2.     Competitive Advantage: Offering a retirement plan can give your business a competitive advantage over other companies that don't offer this benefit. According to SCORE, a resource partner of the Small Business Administration, in December 2022, 28% of businesses with less than 10 employees, 51% of businesses with 10-24 employees, 63% of businesses with 25-49 employees, and 73% of businesses with 50-99 employees offer retirement plans.

 3.     Employer Flexibility: Retirement plans come in many different types and can be customized to meet the needs of your business and your employees. They can also grow and change as your needs evolve.

 4.     Attract and Retain Employees: Offering a retirement plan can be a valuable benefit that can help attract and retain top talent. We're finding in the current post-Great Resignation environment and among early and mid-career talent, that the retirement plan is a significant factor in the decision to accept a position. Principal's 2022 Retirement Security Survey shows that 36% of employees would consider leaving their current employer for better retirement benefits.

 5.     Employee Savings: Retirement plans offer employees an opportunity to save for their future, which can help them achieve their retirement goals. Retirement Plans are often the singular planning source for employees to help define their retirement goals.

 6.     Retirement Planning Education: Retirement plans can provide valuable education and resources to employees to help them make informed decisions about their retirement savings. Tools that are available for employees can be customized to show employees their myriad of options, and help place them on a pathway to success.

 7.     Employee Satisfaction and Increased Productivity: Employees who participate in a retirement plan are often more satisfied with their jobs, their overall compensation package, and are often more productive and engaged in their work. A retirement plan shows employees that you're being proactive in prioritizing their retirement savings and preparing them for the future.

 8.     Reduced Turnover: When employees feel valued and appreciated, they are more likely to stay with their employer long-term, reducing turnover costs for your business.

 9.     Improved Financial Wellness: Offering a retirement plan can help improve the financial wellness of your employees, reducing financial stress and improving overall job satisfaction.

 10.  Complying with State Mandates for Retirement Plans: More than 30 states are contemplating enacting state-mandated retirement plan legislation, with 14 states having enacted legislation and in varying points of rollout. Maryland's MarylandSaves went live in September 2022, Virginia's RetirePath launches July 2023. Both state's plans utilize Individual Retirement Account (IRA) plans and lack ERISA (Employee Retirement Income Security Act) coverage. While these plans may be a right option for some businesses, it's worth a discussion of the time, cost, and responsibility considerations for your business.

 In conclusion, offering a retirement plan to your employees can provide significant benefits to both your business and your employees. From tax benefits to increased employee satisfaction, there are many reasons to consider offering this valuable benefit. If you're interested in learning more about how a retirement plan can benefit your business, contact us today to schedule a consultation.

citations:

2. https://www.score.org/resource/infographic/infographic-small-business-retirement-investing-your-future#:~:text=28%25%20of%20businesses%20with%20less,99%20employees%20offer%20retirement%20plans

4. https://www.principal.com/about-us/news-room/news-releases/principal%C2%AE-survey-shows-retirement-goal-%E2%80%9Creset%E2%80%9D-many-us-workers-amid-recent-market-volatility-and-inflation#404328

#418994 Mar2023