At what point in your business should you offer a retirement plan?

Written by V. Raymond Ferrara, CFP®

On September 22, 2020

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Did you know that only 28% of businesses with 10 employees or fewer offer retirement plans for their employees? Comparatively, 51% of businesses with 10 to 24 employees offer retirement plans, and 63% of businesses with 25 to 49 employees offer retirement plans. 

Why do so many small businesses avoid offering a retirement plan? Well, if you are a small-business owner, then you already know the answer: money.

Most small-business owners believe they do not have enough profits to invest in an employee retirement plan. They feel that a retirement plan is too expensive to set up and that they do not have the resources to administer a plan.

However, despite costs, there are advantages to offering a retirement plan that make it a beneficial option, even for small businesses. The point at which you offer a retirement plan for your employees is up to whenever you are ready to weigh the costs of setting up a plan versus the benefits of doing it.

Benefits of setting up a retirement plan for your employees

  • Attracting new talent — Small businesses that want to attract quality talent and dedicated employees need to show that they are willing to invest in them. Offering a retirement plan with employer contribution shows that you care and can attract higher-quality talent.
  • Retaining existing employees — Existing employees at companies that do not offer retirement benefits may start looking for one that does. Turnover is expensive, so you may want to keep your existing employees happier by offering a retirement plan.
  • Receiving aid in tax credits — The U.S. government offers tax credits to help support small businesses in creating a retirement plan for their employees. If your company has 100 or fewer employees, you can receive up to 50% of the startup costs in tax credits up to a maximum of $500. Additionally, you can claim tax credits for up to three years after startup to help cut the costs of managing your plan.
  • Receiving tax advantages — Matches to employee contributions are tax deductible up to a limit. This helps lower your overall tax liability for the year, which helps your business save money while keeping your employees happy.

Talk to a ProVise CFP® professional about building a company retirement plan

Deciding on what type of retirement plan to make and how much to contribute is challenging for business owners. You want to offer your employees the best option you can, but you do not want to go broke doing it. At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can review your financial circumstances and goals to help create a financial plan and retirement strategy that works for you and your employees.

 All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.

Are you ready to talk to a professional about creating a retirement strategy for your business? Contact ProVise today to schedule a complimentary consultation.

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