Why Your Business Should Offer Retirement Benefits

According to the AARP, nearly half of all working Americans have no access to a retirement savings plan through their employers. That's about 32 million people. Additionally, small businesses with 100 or fewer employees are much less likely to offer retirement plans than are larger businesses.

The AARP has also reported that American workers find it difficult to regularly save for retirement without access to a savings plan through work. In fact, workers are 15 times more likely to save for retirement when a payroll deduction plan is made available to them.

Why Should Employers Offer Retirement Plans?

First, employers who offer retirement plans benefit from certain tax advantages. Making great retirement options available to employees also supports employee retention and satisfaction. Certain plans that include profit sharing can help employees feel vested in the best interest of your company.

Retirement Savings Options

Simplified Employee Pension (SEP) Plans

• For businesses with any number of employees

• Contributions made by the employer only

• Contributions must be made at the same percentage for all employees

• Employees are always 100% vested in employer contributions

• Does not allow employees to defer income

Savings Incentive Match Plan for Employees (SIMPLE) IRA Plans

• For businesses with 100 or fewer employees

• Funded by employer and employee contributions

• Allows employees to defer income by making salary reduction contributions

• Usually requires a smaller contribution by the employer

• Employees are always 100% vested in employer contributions

Qualified Plans

Defined Benefit Plans (Pension Plans)

• Promise to pay employees a steady flow of income in the future

• Employers must contribute a minimum each year based on certain calculations

• Some small business clients are able to contribute more than $200,000 annually to these plans per employee

Defined Contribution Plans

• Employers contribute to individual accounts for each employee

• Employees can invest money as they see fit among available investment options

• Do not require immediate vesting of amounts contributed

401(k) Plans

• Can make elective deferrals up to a limit

• Employers can contribute a percentage of each employee's compensation

• Employers can match the amount of employees' elective deferrals

• Total employer and employee contributions are limited to the lesser of 100% of compensation or $55,000 (for 2018)

Do you need help selecting a retirement plan?

At Revo Taxpayer Advocacy, our services extend beyond tax preparation and accounting. We provide insight for new business start-ups, financial planning and growth consulting for businesses, and assistance with payroll and business health analytics.