When cash for pay raises is tight, it’s hard to use compensation as a carrot to attract and retain great employees. But the uncertain economy has many workers increasingly focused on long-term financial security. That makes better retirement benefits all the more attractive.
If you don’t currently offer a retirement plan—or if you’re thinking about stepping up from SIMPLE (Savings Incentive Match Plan for Employees) or SEP (Simplified Employee-Pension) plans—it might be time to consider establishing a 401(k) retirement plan.
401(k)s typically invest money in mutual funds, which employees can tap once they retire.
Any employer can sponsor a 401(k) plan. Many match employee contributions to 401(k) accounts, but it’s not required. Employers that do match, however, gain significant tax benefits, which your tax advisor can explain.
When you establish a 401(k) plan, you must take certain basic actions.
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