If you’re like many small business owners, you’ve probably been struggling for months or years to figure out how to attract and keep great employees within your company.
Even if you provide a fun, fulfilling work environment, employees still might leave after a few months if they find a better job that offers more compelling benefits.
One such benefit that is crucial to consider is retirement planning. Offering a retirement plan for your workers is a sure-fire way to keep them around and will help to strengthen the bonds you form with them over the years. After all, if they are paying into the plan for many years, they have a huge incentive to keep working for you until they are ready to retire. For additional information from plan provider Ubiquity, please visit their website at: https://www.myubiquity.com/small-business-401k/small-business-retirement-plans/
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What Are My Retirement Plan Options for My Small Business?
It can be confusing to navigate the many available retirement planning options out there. There are tons of different opinions floating around and some of the plans that are suggested to you, may not apply to your situation whatsoever.
When it comes to small businesses, however, it’s likely that you’ll choose between one of the following three options.
1. SEP Plan (Simplified Employee Pension Plan).
The SEP plan is one that you might consider if you are self-employed, or if you have employees. This type of plan relies on an IRA, or an Individualized Retirement Account. As the employer, you are able to decide whether or not you want to make contributions to employees’ plans on a year-by-year basis. In this way, you have the option to change up how much you contribute whenever you see fit.
2. SIMPLE IRA (Savings Incentive Match Plan for Employees).
SIMPLE IRA plans are Individualized Retirement Accounts that are reserved for businesses with fewer than 100 employees. In fact, if your company grows beyond this number, you will be forced to fold the plan. Therefore, if you plan to expand at any point, you should stay away from this plan.
However, for companies who will likely remain below the cut off line, the SIMPLE IRA offers good retirement incentives for both employees and employers. Also, this type of plan is not subject to IRS compliance testing, as the maximum contribution limits are quite low as compared to the 401k.
401k plans are very popular with businesses both large and small. Interestingly, this plan can be used by single-member companies and giant enterprises alike. There is no upper or lower limit, in terms of number of employees, when dealing with a 401k.
In the end, the type of plan you choose will depend largely on your own individual business. You may find that the SIMPLE IRA is the best plan for you and your workers, or you may elect to start a 401k. The choice is entirely up to you. But whatever you do, be sure to do it soon so that your employees don’t move on to another company that already has retirement options in place.