An easy way to obtain the best employees in your field is by offering workplace benefits. Retirement benefits are something that workers all want to have to ensure their financial stability in their older years. Here are some of the most common types of retirement benefits you should be offering employees at your small company.
If you’re looking for simplicity, then MyRA is right up your alley. This is as simple a retirement account as you’ll find anywhere. MyRA provides Roth IRA accounts for employees. They contribute their after-tax income into their IRA account. There’s no matching on the employer’s end when it comes to funding a MyRA account. Your employees can contribute up to 5,500 dollars per year to this account or 6,500 dollars if they’re over the age of 50. Interest earned is based on the G fund of the government’s Thrift Savings Plan.
A simple 401k plan is another popular choice of small businesses. Simple means that this is a Savings Incentive Match Plan for Employees. It requires employers to contribute to their employees’ 401k accounts each year. As a good 401k advisor can tell you, employees are not required to contribute to their 401k account on an annual basis. The main difference between a simple 401k and a simple IRA is that the 401k plan can allow for loans while the IRA cannot.
Simplified employee pension plans allow employers to contribute to an IRA for their employees without the hassle of filing paperwork with the government. Most optimal for sole proprietorships and partnerships, employers are required to provide the same contribution to every employee. Employers can contribute annually up to 25 percent of an employee’s net compensation. Employees can contribute up to 5,500 dollars per year or 6,500 dollars if they’re over the age of 50.
The last retirement account we’re going to discuss is the simple IRA. Again, simple stands for Savings Incentive Match Plan for Employees. This type of IRA account works for businesses that have 100 employees or less. Your employees can opt to contribute if they so choose, but they’re not required to. The employer is required to contribute on an annual basis for this type of account. Employees are allowed to contribute up to 12,500 dollars per year.
As a small business owner, planning your retirement and the retirement of your employees is a must. Many employees will turn down job offers due to a lack of proper retirement benefits. Be sure that you stick to offering one of the main benefit programs above so you don’t lose viable talent.
Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most of her time hiking, biking, and gardening. For more information, contact Brooke via Facebook at facebook.com/brooke.chaplan or Twitter: @BrookeChaplan