Are you saving enough for retirement? If you aren’t saving enough for retirement, then it’s likely that your employees aren’t saving enough either. That’s a prime opportunity lost to set aside money now to grow it for your future and theirs.
Many small businesses don’t create 401(k) plans because they think it’s too complicated or that they cannot afford it. However, establishing a 401(k) for your business not only helps you and your employees save, but also provides some nice benefits.
Reward – and Retain – Your Employees
There are many ways to show your employees that their hard work is appreciated beyond offering a paycheck. A strong benefit plan will also make your employees feel like working for you is something special. While it’s great if you can offer a matching percentage of employee contributions, it’s not necessary if you can’t afford it. Employees will likely be thrilled to have the option to save for their future.
If employee goodwill isn’t a strong enough incentive, consider the cost benefits of retention. Happy employees are more productive, allowing you to increase your profits. It’s also more cost effective to keep your current employees instead of hiring new ones. Attracting the best talent helps you stay competitive against larger companies.
401(k)s Come with Tax Advantages
One of the best parts about a 401(k) for those paying in is that the money is not taxed until the money is withdrawn. Upon retirement, recipients are taxed at an income tax rate instead of a capital gains tax rate.
What makes 401(k)s special for small businesses is the tax deduction they offer. If you contribute to your employees’ retirement accounts, you are eligible for a tax deduction. Since you are also an employee of the company, you can match your own contributions for even more savings.
If you are a new small business and have at lease one employee, you can get a $500 tax credit every year for the first three years. That money can help offset any costs associated with establishing a 401(k).
Success Isn’t Guaranteed
Saving for retirement is all about planning for your future. Depending on where you are in your life and your career, that future may seem like it’s a long way away. Your plan until then may be to grind hard and get rich enough from your small business that you don’t need to put money into a 401(k). That’s a nice idea, but it isn’t financially sound.
Instead, plan ahead for the future by saving for it. Additionally, that 401(k) can give you the financing you need during tough business times. If you set up a 401(k) to use as a rollover as business start-ups (ROBS), you can access your retirement savings tax-free to help your business. Tenet Financial Group is ready to answer your questions and discuss your options. Contact our Senior Consultants today at (888) 901-3335, Opt. 9 or email us.