Hyden, Miron & Foster, PLLC Law Blog

Monday, March 26, 2018

Offering a 401K Plan for Your Employees

Do I need to match my employee’s 401K contributions?

The U.S. Small Business Administration reports that 72 percent of small businesses do not offer an employer-sponsored 401K plan.  The universal lack of employer-sponsored retirement plans is leaving the average American without savings to support themselves in their old age. Many employers shy away from offering a retirement plan for their employees because they fear it will cost too much and take too much time. Our Arkansas business law attorneys debunk some common myths about offering an employee 401K plan below.

You Do Not Need to Match Contributions

One common misconception amongst employers is small business owners who offer an employer-sponsored 401K plan will need to match their employee contributions. Employer matching is a great perk that employers may wish to consider, but it is not required. Employers who do not wish to offer contribution matching will simply develop a plan that allows their employee to contribute to the savings plan tax free.

Retirement Plans Are Inexpensive

Employers that decline to start a retirement plan for their employees often do so because they fear it will be an expensive process. In fact, employers that shop around will likely be able to find low flat fee 401K plans that can lead to tax savings. Tax credits can reduce the cost of initiating the retirement plan by 50 percent and tax savings continue to supplement the cost of the plan per year.  

Starting a Retirement Plan Will Take Up Little Time

Small business owners wear many hats, leaving them often crunched for time.  The thought of setting up and operating a 401K plan may be an instant deterrent for the busy small business owner. However, today 401K plans can typically be developed in less than a week and require a minimum hour a month investment of your time. Small business owners can explore retirement accounts with various banks and online providers.

Setting up a 401K plan for your employees can improve employee satisfaction and attract desirable new applicants. Employers interested in the process should contact a business law attorney for more information. Your business law attorney can assist you with offering retirement plans and other employee perks in a way that continues to protect your business. Contact Hyden, Miron, & Foster, PLLC if you are need of legal counsel regarding these legal matters.

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