The average employee is more worried about the next paycheck than their current retirement funds. But if you offer or are planning to offer retirement benefits, it’s helpful for your employees to understand and know how to best utilize them for the health of the individual and loyalty towards your business. What are some of the benefits of retirement plans that your employees should know about?
Matching Contributions
If your employee plans offer matching contributions, employees not utilizing it is like leaving money on the table. Generally, matching 401(k) savings and FSA savings are options offered by some but not all employers. When this occurs, Investopedia explains that whatever amount the employee designates to go into their 401(k) per month is matched by their business. If an employee ever changes businesses, this amount can be rolled over into their new 401(k) as well. FSA matching is a great tool, and can be used for medical spending. Either way, explaining these perks to employees will help them better appreciate and trust your business.
Flexibility
According to Franchise Gator, a Rollover for Business Startups (ROBS) can be used to take 401(k) money to fund a business. This gives your employees’ finances a boost of options. Many people are exiting the gig economy of the early 2000’s, searching instead for stable work with exactly what you’re offering—benefits! However, many by necessity run their own businesses as well, and so will appreciate the kind of flexibility a 401K can offer for savings or future business ventures.
Tax Advantages
Another great advantage your employees might not be aware of regarding retirement plans is that they can be financially beneficial now. According to Zenefits, whatever your employee puts into their 401(k) is tax deductible. That lowers the income that is taxable by the government, and even can put your employees in a lower tax bracket. With a 401(k), that money will be taxed eventually when a person pulls it out during retirement, but by then they’ll be in a much lower tax bracket and so will ultimately save now and then.
When it comes to benefits, there are a myriad of options available to you and therefore to your employees. The question then goes to what your business is willing to offer to attract hires and retain the employees you already have. The better they understand these perks at the time of hiring and going forward, the more loyalty they’ll feel towards your company!
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