Owning a small business is no easy feat. There are a world of things you have to keep tabs on, from overseeing payroll to making sure you’re up to date on inventory.
Another thing small business owners are tasked with is creating attractive benefits packages. You don’t want to skimp on benefits and risk losing employees. So it’s important to take a close look at what you’re offering.
One perk you may want to prioritize is a 401(k) plan. Without one, many employees might struggle to save for retirement.
But it’s important to know what to look for in a 401(k) so you’re able to give your employees the best possible plan while making your life easier.
How to choose the right 401(k) plan for your business
In this Reddit post, a small business owner shares their experience in opening a 401(k) plan for their company. They start by saying that they put off the process for a long time because they assumed it would be expensive and stressful. But they were pleasantly surprised at how smooth everything went.
The poster also shared some solid tips for small business owners looking to set up their own 401(k) plans. First, they explained that it’s much easier with the right provider. Some providers automate compliance matters, which can be a lifesaver, they said.
Secondly, it’s important to make sure your 401(k) plan integrates smoothly with your payroll system. If not, you might have a world of ongoing headaches to deal with.
They also shared that there can be tax credits to offset the cost, which is helpful.
The poster did warn to look out for 401(k) fees, as not all providers are up front about them. It’s important to comparison-shop before choosing a 401(k) provider.
The poster was also surprised to learn that their employees didn’t jump at the chance to sign up for their 401(k) plan when it was first introduced. They figured workers would be excited, but some people hesitated because they didn’t understand how the plan worked and/or didn’t want the money coming out of their paychecks.
The latter is understandable, which is why if you’re able to offer a 401(k) plan match as an employee perk, it pays to do so. That could spell the difference between workers opting out of your plan versus participating.
You may also want to choose a plan that offers auto-enrollment. And while most 401(k) plans offer a Roth savings feature at this point, it’s a good thing to check up on, just in case.
Roth 401(k)s don’t offer the same immediate tax benefits that traditional 401(k) plans do. But they come with perks that include tax-free growth, tax-free withdrawals, and the ability to avoid required minimum distributions during retirement.
An essential benefit to offer
If there’s one workplace perk you don’t want to skimp on, it’s a 401(k) plan. So it’s a good idea to take the poster’s advice and shop around for a plan where the provider does most of the legwork and there’s easy payroll integration, among other things.
If you’re first getting started, you may want to talk to other small business owners to see what providers they’re happy with. That could be a good starting point and save you a world of research.
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