Attract and Retain Employees with a Small Business Retirement Plan
Hiring and wages are both picking up: 72 percent of businesses hired employees in 2014 and 74 percent of them raised salaries in the same time period. That gives potential employees more options, and it makes holding on to your current staff more important than ever.
Lots of start-ups offer in-the-moment perks like free meals, on-site pet grooming, or a Ping-Pong table in the lobby. Here’s a more lasting benefit to consider—an employee retirement savings plan. According to the 2014 Transamerica Center for Retirement Studies, nearly three-quarters of small businesses with 10 to 99 employees offer some kind of retirement savings plan.
How much do employees appreciate having a retirement savings plan? The same survey found that an impressive 80 percent of employees who have access to retirement savings plan use it, saving an average 8 percent of their salaries.
Follow the ERISA Rules
Small business owners and self-employed individuals can choose from a range of plans designed for them and their employees: SEP IRA (Simple Employee Pension Plan), SIMPLE IRA (Savings Incentive Match Plan), the Individual 401(k) Plan.
These small business retirement plans are governed by a federal law called ERISA (Employee Retirement Income Security Act). Since 1974, ERISA has set the standards for voluntarily established pension and health plans in the private sector. The law requires, among other things, that:
- Employees receive information about how the plan works, who can participate, and how it is funded.
- The fiduciary roles of the people who manage and control the plan assets are defined and followed.
- There is a grievance and appeals process be established.
The U.S. Department of Labor enforces ERISA and provides useful information on its website. You can also download a copy of The Entrust Group’s report about the range of retirement savings plans available to small business owners.
Sure, buy a fancy coffee machine for the office, but while you sip your latte, check out the advantages of starting a SIMPLE IRA or a self-employed SEP IRA as well.
For more information on these types of plans visit: http://www.theentrustgroup.com/self-directed-ira-plans/small-business-retirement-plans .