Why A 401(k) Match Should Be Part of Your Employee Retirement Plan
Employee retirement plans are still proving a popular incentive for many employees. For employers, there are a number of advantages to be had from offering a 401(k) employer match as part of an employee retirement plan, and three of the most important are listed below: ●
You can attract and retain the top talent
Research has shown that companies who offer such a benefit as a 401(k) employer match, tend to have a much higher chance of hiring better candidates, and because not all companies offer this, you can help yours truly stand out.
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Employee morale, retention and even production, can get a boost
In much the same way as offering a 401(k) employer match helps companies recruit a higher standard of employee, it can also help them to retain them by making them feel happier about their job, and what does a happy worker make? A harder worker! ●
Benefit from employer tax benefits
Tax laws enable employers offering 401(k) employer matching, to claim those matching contributions as tax deductions.
How does 401(k) employer matching work? Provided your contribution limits and withdrawal regulations are in compliance with the standards of the Employee Retirement Income Security Act, you may set your 401(k) contribution rates as you wish, and for more detailed guidance on rates, reach out to a payroll services provider, local or remote. While determining how much money to contribute to your employee’s retirement accounts, you should consider both of the following methods:
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A percentage of an employee’s wage – you may choose to match all employee contributions up to a certain limit that’s equal to a percentage of an employee’s wages. If your contribution limit is set at 4%, for example, and the employee earns $50,000 every year, as their employer, you will need to contribute around $2,000 (0.04 x 450,000) over the duration of the plan. A percentage of an employee’s contributions – some employers may choose to match a certain percentage of contributions instead, and if choosing to match 40% of your employee’s contributions with the same 4% contribution limit, then as an employer of an employee with a $50,000 annual salary, your contribution limit will be $800 (0.4 x $2,000).
Determining how your 401(k) matching process will work most effectively, isn’t always easy to achieve without a little professional input and guidance, and most employers (and employees) get a better deal when seeking help from a payroll services provider. Making it work for you and your employees involves figuring out your employer match contribution limits, making yourself familiar with the IRS-mandated 401(k) contribution limits and determining a vesting schedule that helps to increase employee retention, without causing financial harm to your business. Sound like a lot of work? It is! Get a third party involved and be guaranteed to get the best deal going, while satisfying both parties, and your legal requirements.
Apollo Payroll is dedicated to delivering expert advice, responsive service, and highly accurate payroll processing and reporting to ensure the success and growth of the business that we serve. Our services include comprehensive payroll services in Homestead and other cities in Miami-Dade County, employee background check and group health insurance in Miami & Coral Gables