Why does your company need a group 401(k) Retirement Plan?
Solution Services is committed to providing excellent retirement benefit options for employees. According to our provider-partner, Loring Ward, there are many good reasons to consider a 401(k) plan.
A 401(k) retirement plan can help employees save strategically today to reach a more comfortable retirement tomorrow. Today, many Americans, including your employee, are not saving enough for retirement and that new reality might be setting them up for major financial disappointment down the road.
Advantages for Employees
• Tax deferral: The wages a participant defers to a traditional 401(k) retirement plan account are not subject to federal income tax or state income tax at the time of his/her contribution. In addition, he/she do not pay taxes on the earnings on their 401(k) retirement plan contributions while they are held in the plan.
• Increased savings: Because traditional 401(k) retirement plan contributions are made with pre-tax dollars, participants can save more with a 401(k) retirement plan than with a traditional savings account.
• Flexible: Participants decide how much he/she want to defer to their plan accounts (within government prescribed limits). Solution Services 401k retirement plan allows participants to adjust his/her deferral amounts as his/her economic circumstances change.
• Employer contributions: Many of Solution Services’ clients offer an ‘employer-match’ feature, whereby the employer matches all or a portion of the participant’s contribution. This is a very appealing benefit that allows participants to accelerate their retirement savings.
• Easy payroll deductions: Payroll deductions help make saving for retirement a simple and effortless process. Participants control his/her contribution level and have the flexibility to change it. Through regular deductions, they’ll also be contributing regularly, which may, in the long run, end up paying a lower-than-average price per share unit.
Advantages for Employers
• Deductible contributions: Subject to prescribed limits, employers are allowed an immediate tax deduction for the amount they contribute to their qualified 401(k) retirement plan.
• Recruitment/retention tool: When competing for quality personnel, an employer with a 401(k) retirement plan enjoys a distinct advantage over its competition that do not offer a 401(k) retirement plan.
• Design flexibility: 401(k) retirement plans come with a full range of optional features. The plan design can be customized to meet the particular needs of the company’s owner(s) and employees. By electing a safe-harbor provision, company owner(s) are able to contribute to a 401(k) retirement plan.
• Profit sharing contributions: These contributions can be made by an employer to provide for the participation in its profits by its employees. Company contributions may be determined by a fixed formula or at the discretion of the company’s board of directors.