EDITOR’S NOTE: This column was prepared by the U.S. Department of Labor and walks through questions to consider in setting up a retirement plan for employees of your small business. The post was written by Phyllis C. Borzi, assistant secretary of labor for employee benefits security.
John knows he has been able to attract and keep talented staff because his winery offers a retirement plan. Tim credits the 401(k) plan at the Dairy Queen he manages with motivating employees to stay with the company long term – which translates into more savings for the owner.
For John and Tim – and for small businesses across the country – retirement plans that help their employees prepare for the future are having real benefits for their businesses today.
Saving for retirement is easier than many small business owners think. There are a number of options available to help you and your employees save; and what’s more, they also provide tax advantages to both your business and your employees.
As part of America Saves Week, we’re reaching out to make small businesses aware of these options and provide information to help in choosing, setting up and operating a retirement plan.
Here are five steps every small business can take toward a secure retirement:
- Explore the plan options
There are many retirement plan options available, including Individual Retirement Arrangement -based plans such as Payroll Deduction IRAs, SEPs and SIMPLE IRAs, and defined contribution plans like the 401(k) plan. In addition, myRA is a simple, safe and affordable way to help your employees start saving. Learn more about each option and what is involved in operating the plan before choosing the option that’s best for your needs.
- Determine plan features you want
Consider your needs as a business owner. Review the features of each option to see which best meets your needs. For example, do you want flexibility in employee and employer contributions? What are the pros and cons? The department has publications and tools to help you compare the options.
- Assess your retirement needs
Retirement is expensive. Experts estimate that you will need 70 to 90 percent of your pre-retirement income to maintain your current standard of living after you stop working. How much will you need for a secure retirement? We’ve got tools to help you save.
- Choose a plan
Review and compare the options to find the one that best meets your needs. You may want assistance from a retirement plan professional or adviser who is legally required to act in your best interest. Or you can contact us if you have questions.
- Get started, now
The best time to start saving is right now. We have information to help you set up your plan. And once your plan is in operation, we have publications and tools to help.
Choosing a retirement savings plan is the first important step towards saving for a secure future. America Saves Week is a great time to get started.
Check out the video below. It features small business owners and their employees and accountants discussing retirement saving options and choosing a solution: