This article is a paid partnership with AccuPlan. The content was provided by the advertiser and is published for informational purposes only. For many small business owners, offering a retirement plan might be a distant goal due to its perceived complexity or financial heft. In reality, employee retirement plans are growing more accessible and can…
This article is a paid partnership with AccuPlan. The content was provided by the advertiser and is published for informational purposes only.
For many small business owners, offering a retirement plan might be a distant goal due to its perceived complexity or financial heft. In reality, employee retirement plans are growing more accessible and can be instrumental in business growth and financial success.
Why a Retirement Plan Is a Business Asset
A retirement plan is primarily an employee benefit, but it also offers significant advantages for business owners when set up correctly. Here are some notable ways in which a retirement plan can benefit your company.
Attracting and Retaining Talent
It can be challenging for businesses of all sizes to attract and retain skilled employees. Benefits can be an important deciding factor, especially for candidates seeking financial assistance and stability. A 401(k) or a similar plan signals a business’s professionalism and long-term commitment to employee well-being.
Employees who feel secure are less likely to leave their jobs. According to a PwC study, 73% of financially troubled employees would consider switching employers if they cared more about their economic well-being.
Significant Tax Advantages
Retirement plans can have significant tax incentives. Employer contributions are usually tax-deductible, and some allow business owners to defer taxes on their portions. New businesses may also qualify for startup tax credits that offset setup and administrative costs. This way, business owners can invest more in their people while keeping more capital inside the business.
Boosting Employee Morale
Employees who feel financially supported are also more likely to be engaged in their work. A retirement plan encourages consistent saving, reduces financial stress and shows a company’s investment in employees’ futures. It minimizes anxiety about employment and future planning, which can translate into higher motivation and stronger performance.
Saving for Your Own Future
One underrated yet practical benefit of setting up an employee retirement plan is that business owners can also participate in it. Owners can contribute the same amounts — sometimes more — into their workplace plan, accelerating their personal retirement savings while supporting their team.
A Field Guide to Small Business Retirement Plans
With only 59% of the U.S. population having a retirement savings plan, employers still have room to improve in providing the right benefits for their staff. The right retirement plan will usually depend on the company’s size, cash flow, growth plans and administrative capabilities.
Here are some standard plans small businesses might want to explore.
401(k) Plans
The 401(k) is the most recognizable plan and is often the most appealing to employees. It allows workers to contribute a portion of their paycheck, while employers can choose whether to offer matching or profit-based contributions depending on the plan document.
This type of plan is also becoming more accessible to small businesses, with third-party administrators and payroll integrations helping handle compliance and reporting.
SEP IRA Plans
A Simplified Employee Pension (SEP) individual retirement account (IRA) is one of the easiest plans to set up and maintain. It requires minimal setup and maintenance costs and allows employers to contribute up to 25% of an employee’s pay.
It enables flexible contributions, which can be beneficial during times of inconsistent cash flow. However, business owners do have to make uniform contributions for all qualified employees.
SIMPLE IRA Plans
Also known as a Savings Incentive Match Plan for Employees IRA, a SIMPLE IRA is designed specifically for small businesses with 100 or fewer employees. Workers can contribute through payroll deductions, and employers are required to make either a matching or fixed contribution each year. While the contribution limits are lower than a traditional 401(k), the plan is easier to administer and is less expensive up front.
Profit-Sharing Plans (PSPs)
Profit-sharing plans allow employers to contribute to employee retirement accounts based on business performance. Contributions are discretionary, so owners can adjust amounts year over year depending on cash flow. Since these amounts can be less consistent, PSPs usually come with traditional 401(k)s or IRAs as a bonus for owners or key employees.
4 Steps to Launching an Employee Retirement Plan
Launching a retirement plan is a significant project, but it can be a manageable and straightforward process when broken down into clear steps. Each phase builds on the last, helping small business owners move from planning to implementation easily.
1. Determine Your Business’s Goals and Budget
Before choosing a plan, define what success looks like for your business. Some owners prioritize attracting and retaining talent, while others may want to focus on maximizing tax advantages or boosting their own retirement savings. Clarifying these goals first will shape any succeeding decisions.
Budgeting is another important planning step. So, you’ll want to think about employer contributions, setup costs, administrative fees and potential matching commitments.
2. Select the Right Plan Type
With your goals and budget in mind, the next step is choosing the retirement plan structure that best fits your business. Business leaders must consider factors like employee count, income stability, cash flow and administrative capacity.
For example, a consistently growing company with full-time staff may benefit from a 401(k), while a smaller team with variable profits might prefer a SEP or SIMPLE IRA. Selecting the right plan helps prevent costly fees and changes and ensures the plan aligns with real business operations.
3. Choose a Plan Provider or Administrator
The right provider can impact the execution of your company’s retirement plan. A provider handles compliance, reporting and ongoing management, helping you navigate complex regulations more effectively. When evaluating providers, look for experience with small businesses and responsive support.
4. Create the Plan Document and Set It Up
After selecting a provider, the formal setup begins. This step includes drafting the plan document, which outlines eligibility rules, contribution formulas, schedules and administrative procedures. Accuracy is important, as this document governs execution and ensures compliance with government regulations. After drafting and adopting the plan, you establish the employee accounts and finalize any account connections and contribution processes.
How Can Small Business Owners Offer Retirement Plans to Employees?
AccuPlan works closely with small and midsized businesses to design retirement solutions that align with realistic goals. Its strengths include hands-on support, clear guidance through compliance requirements, low industry fees and a strong understanding of how business owners can balance employee benefits with personal and business goals. With this provider’s support, small enterprises can confidently set up retirement programs that serve employee needs while aligning with broader financial objectives.
Saving for Your Future
Small business owners can offer retirement benefits by choosing the right plans and a realistic approach. Working with an experienced provider like AccuPlan is a choice due to its focused approach and experience with small businesses across numerous sectors.
