There’s no doubt about it: we are living through a very tough time for employers and employees both. In particular, small businesses are having a particularly rough go as they attempt to navigate the shifting interests and preferences of the current workforce.
There are many things that have remained consistent over the years, however. For instance, workers have always wanted to be employed by a company that shares their values. There is nothing worse for many employees than feeling like they are working for a faceless corporation who doesn’t care about them.
Furthermore, workers want to find a job that offers great pay, flexible hours, and great retirement packages.
In this article, we will discuss the various options afforded to small businesses regarding retirement plans.
Small Business Retirement Plans
According to plan provider Ubiquity, when it comes to smaller companies and self-employed solo ventures, three basic plan structures bear consideration.
1. SEP Plan.
The Simplified Employee Pension plan is one of the easiest plans for employers to initiate and maintain. Basically, this plan is funded entirely by employer contributions to each eligible employee’s IRA plan. The employer can decide whether they will contribute to an employee’s plan and how much they will contribute on any given year.
In terms of what type of business this plan appeals to, both self-employed solo entrepreneurs and those with employees may decide that the SEP is the best choice for their company.
2. SIMPLE IRA Plan.
Much like the name suggests, the SIMPLE IRA or the Savings Incentive Match Plan for Employees, makes it easy for employers to provide a compelling retirement plan for their workers. The SIMPLE IRA is a good choice for companies who have less than 100 workers and have no plans to grow beyond this number. Furthermore, this plan requires very little oversight and is not subject to government testing (this is in contrast to the 401k).
Unfortunately, because of the less stringent rules, the SIMPLE IRA offers slightly less compelling benefits than a 401k plan. Business owners who run small operations may consider this plan, but self-employed workers should look elsewhere.
3. 401k Plan.
Whether you’re running a solo venture or managing a huge enterprise, a 401k can accommodate your company’s needs. These plans offer huge contribution maximums as well as flexible tax structures.
On the other hand, they do require a bit more oversight than IRA plans and if the plans are not compliant with government rules, hefty fines can set these businesses back.
Retirement Planning Is Easier with the Right Plan Provider
If you are ready to start a retirement plan for your business, you should contact a plan provider as soon as possible. These helpful individuals will talk you through your options and make sure that you select the best plan for your needs.
But don’t delay! The longer you wait to start your plan, the more chance you have of losing great workers to a competitor. If you have any questions, talk to a plan provider now!