401(k) plans are among the most commonly offered employee benefits, and for good reason. 401(k) plans offer many advantages for both employers and employees. For employers, 401(k) plans can help attract and retain talented employees. On the other side, these plans offer a way to save for retirement on a tax-deferred basis for employees. 401(k) plans also allow employees to choose how their money is invested, allowing them to tailor their retirement savings to their specific goals. In addition, 401(k) plans often include employer-matching contributions, which can help employees boost their retirement savings even further.
Overall, 401(k) plans offer several key benefits that make them an essential part of any benefits package. At Employee Retention Benefits, we bring decades of experience to make your 401(k) package practical and effective for your employees. Let’s explore the benefits of providing 401(k) plans to your employees.
401(k)s are a top tool for attracting and retaining talent
Offering a 401(k) plan is one of the most effective ways to attract top talent. Employees take significant comfort in knowing that their employer is invested in their future and that they can save for retirement comfortably. Employers who do not offer 401(k) plans might not be seen as top employers and can have difficulty recruiting. If an employee is evaluating offers from more than one company, the 401(k) contribution matching can become a factor in choosing one firm over another. As a result, your organization must evaluate how your 401(k) matching structure can make you stand out in the market to strengthen your workforce.
Offering 401(k)s can have significant tax benefits
401(k) plans are an attractive employee benefits package because they offer tax advantages to both employers and employees. Employers may deduct 401(k) contributions from their taxable income, and employees do not pay taxes on 401(k) contributions or earnings until they withdraw the money. On top of that, 401(k) plans also offer administrative tax breaks for businesses. 401(k) plan administration costs — including recordkeeping, investment management, and compliance testing — are all tax-deductible. As a result, 401(k) plans can be an appealing way to reduce your tax liability.
401(k)s incentivize employee saving
401(k) plans often offer matching contributions from the employer. This setup means that the employer will contribute a certain amount for every dollar that the employee contributes. This contribution has its limits and can depend on the compensation structure. For example, if an employer offers a 50% match on 401(k) contributions up to 6% of an employee’s salary, and an employee has a salary of $50,000 per year, the employer would contribute $1,500 per year to the employee’s 401(k) plan. Depending on the employer’s level of contributions, your 401(k) contribution structure can signal to an employee that you care about their financial future and want them to save for a happy retirement.
If you’re in the Los Angeles, California area and are searching for a 401(k) plan for your organization, we’re here to help. At Employee Retention Benefits, we offer a wide range of benefits solutions, including 401(k) plans that help transform your HR practice.
