It’s no secret that the average American workplace is changing. Work-from-home days and completely remote working opportunities are causing the traditional office to evolve. But even with as much disruption as there has been in a business’s surroundings, the need for certain benefits hasn’t changed much. In fact, according to a 2016 Aflac survey, 75 percent of employees expect their company to provide 401(k) or other retirement plans as part of their benefits package.
However, many small business owners may be reluctant to offer retirement plans. Whether it’s time spent implementing plans or it’s the funds needed to provide this option, small business owners remain hesitant. In reality, offering employees this kind of benefit can help to attract premium candidates for new roles.
With local commercial insurance in Orlando FL options, such as retirement insurance services offered by Hilb Group, the benefits come built into a business’s plans. Here’s a better understanding of why it’s important to offer retirement services to employees.
Retirement Plan Basics
Retirement plans are classified as either qualified plans or non-qualified plans. Qualified plans meet certain requirements of the Employee Retirement Income Security Act of 1974 and qualify for major tax benefits. Participants in this kind of plan do not have to pay income tax on the amounts contributed on their behalf until the year the funds are distributed to them by the business.
Non-qualified retirement plans, on the other hand, do not meet ERISA guidelines as well as the requirements of the Internal Revenue Code. These plans are usually designed to provide a type of deferred compensation for one or more executives on the plan.
Benefits of Providing Retirement Plans
There are many benefits of having retirement plans built into benefits packages for employees. While they come with tax incentives and the ability to attract quality candidates for jobs, they also help companies out in other significant ways including:
- Retaining Employees: Not only can retirement services attract new employees, but they can also help you retain those employees who are valuable to your success. Keeping good employees can lower your turnover cost and helps businesses operate more efficiently.
- Lowers Income Taxes: Business owners are able to match the contributions made by employees. Your matching contributions are tax-deductible up to certain limits. What’s more, by starting a new plan, you can qualify for an additional tax credit.
- Pre-Tax Contributions: Contributions made by employees on a pre-tax basis are deferred and will reduce taxable income. The growth of your investments from interest also grows as tax-deferred. In this regard, business owners will not have to pay taxes on their contributions or their earnings until money is withdrawn on a plan.
- Payroll Deductions: Employees are more likely to invest in their future through a payroll deduction if they are given the option. Employees are also more likely to stay on course with their investment plans.
- Long-Term Compounding: Retirement plans offer employees long-term compounding benefits. A retirement plan becomes more secure the sooner the employee starts a plan.
About The Hilb Group
Deciding what coverage you need and what limits and deductibles make the most sense can be tricky. Founded in 2009, the Hilb Group has been helping clients to make sense of their options and make the smartest choices for their circumstances. Whether you need Warehouse Insurance or any other type of business or personal coverage, we encourage you to contact our friendly, experienced, and capable team today. Call us at (800) 776-3078 for a consultation.