Offering Employees a 401(k) – What You Need to Know
When you own and operate a business, it’s important to take care of your team. Sometimes, it’s hard to know exactly how to do this and what benefits you should offer to your employees. Also, it’s important to know exactly what your employees want before you make any offers. It’s common for employers to ask how a 401(k) works and whether or not they should offer a 401(k) to their employees. To help you answer these questions, we’ve put together this short guide.
How Does a 401(k) Work?
A 401(k) is an account which acts like a savings account. Money is put into this account for the sole purpose of being used when the holder has retired. Money is put in throughout the holder’s working life and the sum steadily grows over time. Funds in the 401(k) can be withdrawn when the holder has retired and be used for whatever the holder wants. This kind of money can help a person to live a comfortable lifestyle long into their retirement and is often a major plus point that an employee considers when looking for a new job.
Should I Offer Employees a 401(k)?
There are several reasons why businesses may benefit from offering 401(k)s as part of their benefits package.
- A 401(k) can mean that employees will accept a lower salary as they’re receiving compensation in the future.
- Small businesses that have fewer than 100 employees can qualify for a special tax credit, if they offer their employees a 401(k).
- Business owners who set up a 401(k) for their employees can enjoy the benefits of pre-tax contributions.
How Benely Can Assist You
The team at Benely are benefits experts. We have many years of combined experience working with businesses all around the United States across many industries. There are many providers of 401(k)s out there, and when you partner with the pros at Benely, you benefit from access to the absolute best of them.