Did you know you could set up a 401k plan at your business and not have to match employee’s contributions?
Many business owners would like to start a 401k plan at their business, but don’t because they assume that they have to immediately match employee contributions, which sounds costly. Actually employers don’t have to match contributions, unless they want to. Below is more information concerning why to start a 401k at your business.
Why 401k Plans?
401(k) plans can be a powerful tool in promoting financial security in retirement. They are a valuable option for businesses considering a retirement plan, providing benefits to employees and their employers. Employers start a 401(k) for a host of reasons.
- A well-designed 401k plan can help attract and keep talented employees.
- It allows participants to decide how much to contribute to their accounts on a before-tax basis.
- Employers are entitled to a tax deduction for their contributions to employees’ accounts.
- A 401(k) plan benefits a mix of rank-and-file employees and owner/managers.
- The money contributed may grow through investments in stocks, mutual funds, money market funds, savings accounts, and other investment vehicles.
- Contributions and earnings generally are not taxed by the Federal government or by most State governments until they are distributed.
A 401(k) plan may allow participants to take their benefits with them when they leave the company, easing administrative burdens.