(Family Features) A comfortable retirement is something most people aspire to, and there are many paths to plan for that phase of life. While many employers offer retirement savings plans as a workplace benefit, small business owners, whose time and resources are already at a premium, often face barriers – including hours of administrative work, additional costs and compliance liabilities – when setting up these plans for their employees.
Today, many small business owners understand the power of offering a retirement plan, such as a 401(k), to attract and retain top talent and provide additional financial security for their employees. In fact, a retirement plan is the benefit most wanted by workers after health insurance, according to a survey commissioned by 401(k) provider Human Interest.
Many states have passed or enacted laws requiring most employers to offer retirement plans for employees. Currently, 20 states have passed legislation for state-mandated retirement programs and 13 states have active programs. Legislation is currently being considered in an additional 28 states.
Employers can opt out of state-mandated retirement programs by offering a 401(k) plan, simplifying compliance for business owners. Federal regulations, such as SECURE 2.0, introduced incentives and requirements for business owners who offer 401(k)s, which make it easier for employees to save and access their funds.
If you’re a small business owner setting up a retirement plan, these considerations can simplify the process while helping employees save for retirement.
Add Auto-Enroll to Your 401(k) Plan
Many people intend to save for retirement, but don’t take the necessary steps to enroll in a plan. Plans that include an automatic enrollment feature help overcome this inertia by automatically collecting deferrals from employees’ compensation each pay period unless they opt out of participation.
SECURE 2.0 mandates auto-enroll for most 401(k) plans established after Dec. 29, 2022. If your plan is not subject to the requirement, consider adding it voluntarily. Ultimately, auto-enroll can help contribute to a more financially secure workforce by encouraging consistent savings habits.
Take Advantage of Match Contributions Programs
While the primary benefit of a 401(k) plan is to help employees save for retirement, offering an employer match encourages employees to participate, as employees may consider the match “free” money. In addition, employers can take a tax deduction for their matching contributions, up to 25% of the total compensation paid to eligible employees for the year.
SECURE 2.0 also introduced a tax credit for matching contributions for small employers with new plans. Employers should be aware the tax credit is an alternative to the deduction; the employer can’t claim both in the same year.
Pick a Platform Designed for Small Businesses
The administrative burden of setting up retirement plans can be overwhelming for some business owners. Choosing a tech-enabled 401(k) platform like Human Interest – which offers a fast online setup in a few clicks; transparent pricing; and attentive, human support – can help employers navigate the shifting landscape of state-specific regulations and mandates.
When choosing a provider, also consider the upfront fees you’ll pay (both as an employer and for the employees participating in the plan), if the platform integrates with your payroll provider, customer service response times and how the 401(k) provider can help answer questions about compliance from regulatory bodies to set your employees up for long-term success.
Find additional information to help provide a more secure financial future for your employees at humaninterest.com.
Photos courtesy of Shutterstock
Source: Human Interest
