Highly sought-after workers are looking for great 401(k) plan benefits

About half of all small businesses (56%) offer their employees a 401(k) or other self-funded retirement plan, according to a 2015 Transamerica Center for Retirement Studies Survey. But the vast majority of workers highly value employer-sponsored retirement benefits, and most agree that it’s a major factor in their job search decision. What’s more, workers are more likely to switch jobs for a similar job that has a retirement plan—and half would switch jobs for a better retirement plan. Many businesses, particularly the small and mid-sized ones, may be missing out on attracting highly talented employees. They may also be losing talented employees to companies with a better retirement plan.

Recruit talent, retain talent, and get better-qualified employees

The most qualified job candidates are in high demand, and they generally garner interest from many companies when they’re “on the market.” Many highly-skilled or specialized workers are more likely to take the position with a more robust retirement plan, as retirement benefits are cited as the second most important perk behind health insurance.

Many companies lose highly-skilled individuals to competitors with better benefits. Nearly every valuable employee scours the job market for a better career opportunity at some point, and better retirement benefits might be a difference maker. A skilled, dedicated workforce is integral to operating a successful business, and the companies that attract talent rather than lose it have built-in personnel advantages.

Realize valuable tax benefits for your business

Businesses can take advantage of tax deductions simply by offering a 401(k) plan to their employees. Many small businesses qualify for a $500 tax credit to put toward the cost of operating the plan for each of the first three years, and in some cases this can offset most or all of the fees for setting up the plan. Costs that a business does incur can be deducted when tax time comes around—and matching employee contributions to the 401(k) are also tax deductible.

Additional benefits for the business

  • A 401(k) isn’t just an employee benefit—the owner/employer can participate in the plan too. Current regulations allow all employees and business owners to contribute up to $18,000 on a pretax basis each year. So in addition to the tax savings the business owner receives for offering the plan and/or matching employee contributions, business owners will receive additional tax savings for participating in the plan.
  • Employers have control regarding eligibility, meaning the business owner can decide when an employee is allowed to take part in the plan (usually based on years of service, or whether the employee is full-time or part-time).
  • Employers have flexibility over company contributions to the employees’ 401(k), including establishing a vesting schedule—a schedule that determines when the employee owns the contributions the business makes on the employee’s behalf. Employers aren’t required to make contributions, but it does help the plan pass government tests that determine how stable the plan is.

Offering a robust and flexible 401(k) plan can help businesses attract and retain talent by beating the competition when it comes to benefits. To learn more about how an improved 401(k) plan can help attract and retain employees, contact Fisher Investments 401(k) Solutions.

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Fisher Investments 401(k) Solutions is committed to bringing unparalleled support to small and mid-size businesses and their employees through 401(k) retirement plan services.

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