How to Create a Retirement Plan for Your Employees

retirement plan

Company-sponsored retirement plans used to be somewhat challenging to start, especially for smaller companies. But with recent changes and incentives brought on by the federal government, business owners are now encouraged to create retirement plans for their employees. These plans help employees and employers alike plan for the future and invest in promising financial growth.

Here are some tips on how to create a retirement plan for your employees in 2021.

What’s a 401(k) Plan?

A 401(k) plan is a kind of IRS-approved retirement plan that allows employees to contribute pre-tax amounts, salary deferrals, and individual retirement accounts. Employers can also contribute to employee accounts, usually by matching employee contributions up to a certain amount. Employers can choose from several kinds of small business plans and other varieties of retirement plans.

Organizing and contributing to a retirement plan benefits your business, you as the owner, and your employees. Specifically, your employer contributions are a deductible business expense, which cuts down your business’s taxes.

Your business can receive tax credits and other incentives for forming a retirement plan. This tax credit is for businesses with 100 or fewer employees and is applied to half of your eligible startup costs for a plan, up to a maximum of $500 per year. The credit is given for forming and administering the retirement plan and informing your employees about it.

How to Create a Retirement Plan

Creating a 401(k) plan for a company is a challenging process. The following tips should give you a basic rundown of what to expect when setting up a plan:

  • First, write a plan with an adviser’s help, like Orlando Retirement Administration provider Hilb Group, and send it to the IRS for a determination letter.
  • Next, share information with employees as you begin the plan, and then follow up each year afterward.
  • Find a trustee, such as an investment manager, to help you decide how to invest retirement plan contributions and manage individual employee accounts.
  • Begin making employer contributions and allowing employee contributions through your payroll system.

Automatic Enrollment

One popular feature of workplace retirement plans is automatic enrollment as a way to increase employee involvement. You can set up an individual plan for each employee and automatically deduct plan contributions from their paychecks. Each employee can choose to opt out or change the amount over time.

Businesses can qualify for a tax credit of up to $500 for setting up a new auto-enrollment account, thanks to the SECURE Act law. It set into place numerous provisions intended to solidify retirement security throughout the United States. This tax credit for employers is in addition to the startup credit noted above, and it’s available to business owners for three years.


Businesses must include verbiage in their retirement plan on how employees become vested in the 401(k) plan, but your business can outline the details. If an employee’s retirement account is vested, it can’t be forfeited if they leave the company. Vesting typically depends on the kind of contribution and the length of an employee’s service with your business. All employees have to be entirely vested when they attain normal retirement age or when the plan ends.

It’s also important to note that you’ll need to decide how to invest the money in employee accounts and what investment options you want to make available to employees. Work with your Orlando Retirement Administration provider to manage the investments and help you and your employees decide on allocating options to serve their retirement plan needs better.

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.