Employee Benefits

Employee Benefits

Offering employee benefits can provide many paybacks to a business and its owners. One payback is staff retention, and another is reduced turnover. In addition, an attractive employee benefits package will often help businesses recruit and retain quality employees.

Designing an employee benefit plan can be a complex undertaking, as plans can cover health care, vacation, sick pay, and retirement plans. Employee benefits will have different levels of value depending on employees’ age, gender, and other factors, so it is important to understand which benefits may be most desired by the workforce, as well as being competitive in the marketplace.

One important employee benefit is a retirement savings program. A common plan is the 401(k), which allows workers to contribute pre-tax dollars into a retirement fund. 401k plans also allow the employer to either match those contributions or not match them – giving employers the flexibility depending on revenue and priorities. Employers opting not to have a match can usually offer 401k plans to employees for a fraction of the cost of other popular benefits such as health care plans.

With the future of Social Security uncertain, these employer-sponsored programs can help working Americans save for their retirement.  Employees often list retirement plans as a key benefit second only to health care. These plans can help a business attract and retain good employees.

Businesses of any size can set up a traditional 401(k) plan, which do not require employer contributions. Businesses of any size can also adopt safe harbor 401(k) plans. This type of retirement plan is similar to the traditional 401(k), except that business owners have to make matching contributions.

The SIMPLE (savings incentive match plan for employees) 401(k) plan, another type of retirement plan employee benefit, was established for small businesses with 100 or fewer employees. With a SIMPLE 401(k), the employer makes contributions to traditional IRAs (SIMPLE IRAs) that are set up for each of the eligible employees.

Employer contributions to their employees’ 401(k) plans are tax-deductible, but depending on the plan, contributions may not be required. There are also age restrictions on a 401(k) in that employees must be at least age 21, and the contribution for employees age 50 and over is higher than the established limit. In addition, employees can take 401(k) plans with them when they leave the company.

401k Options

401k Survey finds investors, employees un-informed

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