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401(k) is a Key Employment Benefit for Small Business

Best Employee Benefit for Small Businesses to Offer

For a small business, offering a 401(k) is not only an employment benefit for employees, it is also a benefit for the employer! There are several reasons a 401(k) is such a key benefit for a small business to offer their employees:

1.A 401(k) allows a small business to compete for talented employees against the big companies.

2. With a 401(k), you can defer income for tax purposes while saving for retirement.

3. Finally, a 401(k) for small business means you can help your employees prepare for their retirement.

As your HR partner, we can help take care of the only downsides to this benefit: paperwork and regulations.

401(k) Improves Talent Recruitment and Retention

If you want to hire and retain top-notch employees, consider offering a 401(k) plan. Larger companies offer inducement packages to talented recruits that contribute toward a retirement plan. With our help, your small business can compete with the big-company 401(k) plans. Everyone is keenly aware of the need to save for retirement and appreciates the tax deferred benefit of a 401(k).

Deferring Taxable Income Makes Sense 

A 401(k) is attractive because you can defer more income into a 401(k) than an IRA. In addition, costs and contributions are tax-deductible. The most popular plan is one in which you match your employees’ contributions at either 100% or 50%. You can also have a “safe harbor” option in which a certain percentage of the employer contribution is mandatory and immediately 100% vested. 


For example, an employee contributes 6% of their income and an employer with a 50% matching program contributes 3% of the employee's income.

Paperwork and Regulations for a 401(k) plan

There are many requirements for a 401(k) plan. We are happy to provide details, but some general requirements include:

  • The plan is written and communicated to all employees and is exclusively for their benefit.
  • The plan does not discriminate in favor of highly-compensated employees or require that an employee has more than one year of service to participate.
  • The plan must meet minimum vesting rules.
  • The plan accounts for payouts and payments when an employee retires or reaches 70.5 years old.
  • You must report to governmental entities, as well as plan participants

Start Your Retirement Savings Today

Contact us to get your plan in place. Reap the benefits of attracting and retaining the best talent. Defer contributions to your own retirement. Plus, gain the intangible benefit of knowing you are providing yourself and your employees an opportunity to be financially stable in retirement!
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