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Small Business 401(k) Plans
Employees have the option to consider if they would like to contribute to the 401(k) or not. For employers, the cost of a 401(k) is dramatically less than that what you would pay if you opted for a traditional pension for your employees. Plus it allows your company to look better in the eyes of the employees as they can see that your organization is focused on investing in their employees. You will attract a higher quality employee when you are willing to invest money back into your staff. The problem that many small business owners face is justifying the cost of the 401(k) plan. You need to be able to really understand how expensive the program will be and where the money is going to come from in order to help you fund it. Usually the cheapest 401(k) plans are the ones that are offered to the employees without asking you to contribute anything to it. However employees may be wondering why you would even bother offering them anything if you are not planning to contribute. You should plan on contributing something to the program in order to show your employees that you are committed to them. Determine at what percentage you can afford to contribute to the 401(k) plan. Usually it is set at 3% or below. When the recession hit, a lot of employers reduced how much they were contributing as a way to help save jobs so they didn't need to lay off people. This is also a smart practice, just make sure you start contributing again once your sales start to increase and you have the money to do so. To find the right type of 401(k) program for your company you need to shop around. You have to really look around to find a provider that can properly run the program for you and will be able to work with your employees to help them meet their investment goals. Banks often provide them but they usually have a broker that they work with. Just be sure that you are working with the right type of bank so you don't end up hurting your employee's future due to investing with a faulty company. Talk to companies that really do want to help you grow your organization. These are the providers you need to work with because they understand how important it is to invest in your staff and to offer them multiple retirement programs that can help. Does the 401(k) program include online access or software needs to help you manage your retirement? This is something you also need to consider as you want to see your investments and how they are growing. Your employees will appreciate having this type of access as it allows them to add more money to their contribution amount to see how a single percentage point increase can boost their retirement. Having online access makes it much easier to really understand retirement programs and will really make it easier for businesses to manage their accounts as well. |
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