Does a 401K Really Benefit an Employer?

When we think of a 401K, we often think it only benefits employees. However, that is simply not the case! A 401K is a retirement plan that allows eligible company employees to save and invest their money on a tax deferred basis, with an added benefit of employer investment matching options.

See below on how your company can benefit by implementing a 401K Program.

Tax Deductions can benefit your company’s net income

In a 401K plan, the employer can claim a tax deduction on the dollars matched in an employee plan. This tax deduction can lower the overall tax bill at the end of the year for a company. As a result, the company’s overall net income will be higher.

Tax Credits are included with your 401K Plan

For a company starting a new 401K plan, there is an additional tax credit benefit. This credit is $500 per year for a maximum of three years, for a total of $1,500.

Attract & retain talent with your company benefits

Overall benefits, including a 401K plan, make the company more attractive. Offering a 401K to your employees is a selling point for any company recruiting talented new staff. In addition, the 401K perk helps to retain the recruited talent. On average, recruiting and training new employees can cost employers up to twice an employee’s yearly salary.

Customize your plan to best fit your employees’ needs

Since there is not a “one size fits all” option when choosing a 401K plan, you’re able to customize your plan on what is best for your employees. Popular options include dollar for dollar matching or a percentage cap on employee salaries. These plans are usually fully customizable based on the size of the company; and you’re able to choose what is best for you and your employees.

Having a 401K in your company is extremely important because it provides you with tax benefits and talented employees. If your company does not currently have a 401K plan, you may want to look into starting one today through a 401K provider. Large companies should look into a large scale provider such as Fidelity, while start-up businesses may have better luck with a smaller, local provider.

If you have any additional questions or concerns regarding your insurance services give us a call today at 201-267-7500. 

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