Is Sponsoring a 401(k) Plan Really Worth It?

There’s been a lot of talk lately about company retirement plans, including arguments both for and against the value they create for business owners. While some suggest that the effort, expense, and liability involved in sponsoring a plan brings more trouble than it’s worth, it’s hard to argue against the immense opportunity that a well-designed plan creates. As a business owner, you’re tasked with weighing the pros and cons and deciding for yourself whether the benefits of a 401(k) are worth the cost. Here are some important facts to consider.

Tax-Advantaged Savings

Not only do 401(k) plans offer employees the opportunity to save money on a pre-tax basis, the profit-sharing portion of the plan creates unique savings opportunities for business owners. Fully utilizing the plan design allows business owners to shelter a significant portion of their income and reduce tax exposure. In many cases, 401k tax benefits well outweigh the amount of money you’ll be required to allocate towards employee contributions. This makes the plan a win-win for both you and your employees.

Is Sponsoring a 401(k) Plan Really Worth It?

Attract and Retain Top Talent

With unemployment rates hitting decade-lows, employers must work harder than ever to attract and retain top talent. Potential employees have the opportunity to be picky about the jobs they’re willing to accept, and they’re savvy about the benefits they seek. In the environment, the importance of a 401k plan must not be underestimated. For the vast majority of job-seekers, the availability of a company retirement plan with a match has a major impact on deciding whether or not to accept a position.

401(k) plans are also excellent tools for reducing costly employee turnover. Adding a vesting schedule to your matching and profit-sharing contributions encourages employees to stay with your company or risk losing these funds. Offering a high-quality plan with a good match also reduces the chances that another employer will lure your key employees away with the promise of better benefits.  A FiduciaryShield 401(k) ensures the grass stays greener on your side.

Impact of Proper Design

While it’s clear that not having a 401(k) plan creates an opportunity cost greater than the actual cost of maintaining one, it must be noted that all plans are not the same. Today’s employees are more knowledgeable than ever when it comes to their company retirement plan. They don’t just want access to a 401(k), they want a great one. Most are aware of the term “fiduciary,” and expect their employer to act in this role. As a plan sponsor, it’s your responsibility to ensure your company’s 401k plan is meeting its fiduciary requirements. This includes reasonable costs, fee transparency, and providing employees with easy access to their account information.

Enjoy the Benefits of a 401(k) Without the Liability

Employers can now reap all of the benefits of a 401(k) without spending countless hours maintaining the plan or taking on excessive liability. Working with an outsourced administrative fiduciary gives you the peace of mind in knowing your plan meets the necessary requirements while allowing you to focus on more important things, like running your business. Contact FiduciaryShield today to learn more.