Small business owners take on so many responsibilities — from HR to sales and business development — that it’s no wonder if certain benefits may fall by the wayside. Case in point? Researching and managing a 401(k) retirement plan to put employees in a solid financial position for retirement.
However, the effort required to build a 401(k) plan for a small business doesn’t have to be overly time consuming or expensive. The benefits of offering a retirement savings plan for employees make the investment well worth it.
Here are four things to consider when deciding if a 401(k) is right for you:
- Service providers can help take pressure off. Numerous 401(k) plan service providers specialize in small businesses plan needs. They can offer fully-bundled packages that provide the tools, knowledge, and administration that business owners don’t have time to oversee. These third-party providers can offer quality, diversified investment options with an appropriate risk tolerance relative to retirement horizons and help owners and employees save for retirement on a regular basis.
- Keep in mind that retirement plans are important to retention and financial wellness. A 401(k) retirement plan helps recruit and retain quality employees. It enriches the organization’s benefits offering and represents the employer’s interest in helping employees take control of their retirement. Tax-deferred growth for savings also makes 401(k) plans an efficient way for employers and employees alike to invest for retirement.
- Flexible 401(k) plans can fit the culture and future goals of the company. Plans were made more flexible under the 2019 SECURE Act, which is designed to incentivize more small businesses to become sponsors.1 The SECURE Act gives opportunities for business owners to align plans with company core values and culture. Employers can enforce eligibility restrictions, select a vesting schedule and offer matching contributions, while offering profit sharing, automatic enrollment features and for participants to take out loans against their 401(k) accounts. Plus, participants can invest with automatic paycheck deductions that go untaxed until withdrawals.
- The business can benefit by future tax savings. Under the SECURE Act, businesses rolling out plans can receive a three-year tax credit for half of the startup cost, up to $5,000 per year. This tax credit can offset initial overhead and administrative fees of the plan. Additionally, employer contributions to the plan can be deducted from the company’s federal income taxes.
Selecting a 401(k) plan doesn’t have to be daunting. It’s easier than ever to find an affordable option that aligns the owner's retirement vision with business goals and provide a high-value benefit that sets employees up for the long term.
Our small business retirement plan offering, HUB Retirement Select, is specifically designed for small to mid-sized organizations who want an easy to administer 401(k) plan that addresses fiduciary risk and helps employees save for retirement.
HUB Retirement Services provide ongoing guidance on your plan’s structure and management to ensure it meets regulatory compliance guidelines and the interests of your employees.
Contact HUB to speak to a retirement specialist.
Advisory services for HUB Retirement Select offered through Global Retirement Partners, a SEC registered investment adviser and wholly owned entity of HUB International.
HUB Retirement and Private Wealth employees are Registered Representatives of and offer Securities and Advisory services through various Broker Dealers and Registered Investment Advisers, which may or may not be affiliated with HUB International. Insurance services are offered through HUB International, an affiliate.
1 SHRM.org, “SECURE Act Alters 401(k) Compliance Landscape,” Jan. 20, 2020.