As a business owner, you understand the importance of attracting and retaining high quality employees. One of the best ways to do this is by offering a 401(k) plan. In fact, research shows that employees are more likely to join a company if they offer a retirement savings plan. Unfortunately, many small business owners have bought into several common myths that keep them from offering them. Here are six common misconceptions regarding 401(k) plans:
There is a mandate to match contributions. There is nothing forcing you to offer a matching program to employees. If you’re not interested in offering this option, then just implement the plan and let employees make all the contributions.
The fees I’ll have to pay will be through the roof. Since most plans are geared toward large corporations, there are flat-fee plans designed just for small businesses.
There aren’t any incentives available to offer a 401(k). The incentives for the employee are the tax deduction they’ll receive from the plan.
I’ll have to manage everything. You can actually outsource pretty much every aspect of your 401(k). Doing so cuts down on the time spent managing the plan.
My employees won’t get anything out of the plan. Make sure your plan explains everything in simple, easy to understand language. If employees understand what the plan offers then they will surely take advantage of it.
I won’t be able to offer the right investments. One way to ensure this is by asking employees for their opinions of the plan’s investments. You can also outsource third party investment managers to provide employees with easier decision making.
By dispelling these common myths, hopefully you realize how important and beneficial participating in a 401(k) plan can be. Essentially, offering these plans will help your employees achieve their retirement dreams.
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