In today’s competitive job market, it’s more important than ever for small businesses to offer attractive benefits packages to attract and retain top talent. Not only does a comprehensive benefits plan help your employees save for the future, it also makes your small business stand out from the rest – and it even makes your business competitive with much larger companies. And where do those benefits begin? With a small business 401(k).

Why Offer a Competitive 401(k) Plan?

Employees have more options – and more power – than ever before, so offering a strong benefits package is often the key to getting them to choose your business over one of your competitors.

In addition to attracting top talent, a strong 401(k) plan can also improve employee morale and satisfaction. Employees who feel that their employer cares about their long-term financial security are more likely to be engaged and motivated on the job – so think of a 401(k) as a way of showing your employees you care.

As a small business owner, you can also receive tax benefits when you offer a 401(k) plan. Additionally, employer contributions to employee savings are tax-deductible, and your small business may even be eligible for tax credits for starting a plan.

Another benefit? Lower turnover rates, which means even more savings for you (plus you get to keep high-performing employees).

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How to Create a Competitive 401(k) Plan

To create a competitive 401(k) plan, it’s important to find one that’s right for your small business. Some key considerations include:

  • Understanding the needs of your employees. Different employees may have different financial goals and risk tolerance. It’s important to offer diverse investment options to accommodate these differences.
  • Providing diverse investment options. Offering a range of investment options can help employees diversify their portfolios and maximize their returns.
  • Offering employer matching contributions. This is a great way to incentivize employees to save more and take advantage of the benefits of the plan. (And money you match is tax-deductible.)
  • Communicating the benefits of the plan to employees. Regular communication about the benefits can help encourage employees to participate in your small business’s plan.

Common Mistakes to Avoid When Creating a 401(k) Plan

Once you’ve decided to implement a 401(k) plan to help your small business retain top talent, there are a few common mistakes to avoid:

  • Not offering matching contributions. Without an employer match, your employees may be less motivated to contribute to the plan.
  • Offering limited investment options. Offering a narrow range of investment options can limit employees’ ability to diversify their portfolios and maximize their returns.
  • Failing to communicate the benefits of the plan to employees. Regular communication about the benefits of the plan can help encourage employees to participate in your business’s 401(k) plan.
  • Not regularly reviewing and updating the plan. It’s important to regularly review the plan to ensure that it continues to meet your employees’ needs.

 

Ubiquity is not a registered investment advisor and no portion of the material herein should be construed as legal or tax advice. Please consult with your financial planner, attorney and/or tax advisor for advice.

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Contact Jay Jacob, Sr. Retirement Plan Consultant

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San Francisco, CA 94104

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© 2023 Ubiquity Retirement + Savings
Privacy Policy
44 Montgomery Street, Suite 300
San Francisco, CA 94104