Why Your Small Business Needs a Retirement Plan
Even if you run a very small operation with just a few employees, you need to keep your workers happy.
Staff turnover is a serious problem that has only gotten worse over the years. Many workers don’t feel fulfilled or respected at their work places, leading them to seek green pastures at another place of employment.
Luckily, there is an easy way to attract and keep employees for many years to come: offering a great retirement plan.
Small Business Retirement Plan Choices
Essentially, there are three main options when it comes to small business retirement plans.
- Simplified Employee Pension Plan or SEP: This type of plan relies solely on employer contributions. This plan offers significant amounts of flexibility for the business owner, as he or she can decide how much to invest in employee’s IRA plans each year.
- SIMPLE IRA: The Savings Incentive Match Plan for Employees is a type of retirement plan that combines both employer matching contributions and employee deferrals. This type of plan is similar to a 401k in many ways. However, the differences lie in the fact that, with a SIMPLE IRA, companies cannot employ more than 100 people, there are no IRS testing requirements, and the maximum contributions are lower than they are with a 401k.
- 401k: Similar to the SIMPLE IRA in many ways, the 401k plan allows both employers and employees to contribute to their retirement funds. In contrast to the IRA, however, the 401k allows employees to make larger contributions, offers the choice of Roth (after tax) or traditional (pretax) contributions, and generally allows for more investing options.
Therefore, depending on the unique needs of your business, any one of these plans might be a good option for you.
Selecting a Plan Provider
If you’ve weighed your options and decided on the best plan for your business’s needs, you next need to choose a provider who will walk you through the steps of starting your plan.
When browsing through the different provider options, you’ll want to be sure that you select one who will be most helpful for your specific needs. Therefore, be sure to pick a provider who checks all of the following boxes:
- They are helpful and available. When you have questions, you deserve to get answers quickly. Your plan provider should offer multiple ways to get in touch such as email, phone and/or chat. If they only offer one avenue of communication, and it takes hours or days to get an answer, you may want to take your business elsewhere.
- They use the best platform and technology. It should be easy to make changes online when you or your employees need to. There shouldn’t be a massive learning curve where you have to learn a complex system that doesn’t operate intuitively. Be sure to inquire about your provider’s platform before moving forward.
- They don’t impose any hidden fees. Some providers will attempt to hide fees and costs deep within their contract. Look for a provider who is upfront about their costs and fees.