With only half of all Americans set to meet their retirement savings goals, it stands to reason that the earlier you start planning for retirement, the better. But when it comes to small business owners and employees, planning and saving for retirement might at first seem like a bigger challenge.
For truly small businesses, offering a 401(k) plan to employees might seem out of reach. That isn't the reality though. SurePayroll regularly surveys small business owners on small business optimism and relevant trending topics, and in our August 2016 SurePayroll Small Business Scorecard we found that 28% of small business owners surveyed offer a 401(k) plan, and 34% view a 401(k) plan as their main method of saving for retirement.
So how can the majority of small businesses close the gap? There are several options when it comes to 401(k) plans, and what works for one small business might not be a fit for another. We covered different options in March's Small Business Owner's Guide to 401(k).
The bottom line is that a 401(k) plan can help both small business owners AND small business employees properly plan and save for retirement. Beyond saving for their own retirement, small business owners starting a 401(k) for the first time can qualify for a $500 tax credit for each of the first three years of the plan. And from an employee perspective, 401(k) plans are ranked second in terms of desired employer-offered benefits, with 75% of workers ranking it as "extremely" or "very" important.
While small businesses can set up a 401(k) plan themselves, there are also a variety of options if they'd like to leverage outside expertise and advice. Financial advisors, banks, and insurance agencies all offer options for small businesses looking to plan for retirement. Additionally, if small businesses are using a vendor to process payroll and handle payroll taxes and filings, they should ask if their provider also offers 401(k) as an option.
The benefit of combining a 401(k) plan with your payroll service is multiple: you can streamline the number of vendors and contacts you are working with, you can easily handle deductions on a single platform, and, given that paystubs already offer transparency for employees, you can provide a simple dashboard for employees to understand their paycheck and their retirement planning.