One of the most important benefits for workers are retirement plans (commonly known as 401(k) or Simple IRAs).
Retirement plans are the best way to help your employees save money for retirement. They represent one of the most sought-after benefits when considering a job opportunity, so putting together a robust plan will help you attract and retain top talent.
What is a retirement plan?
Your company as employer retains an agreed percentage of the employee's salary and keeps it in a fund. In addition to having the benefit of saving this income for the future, it will have tax benefits, in addition to the performance of the plan you choose for your company.
What are the advantages of implementing these plans?
It is an expected benefit: Employees seek these benefits, especially in the case that the company matches the employee's contribution. Usually, companies match contributions up to 3% of salary, in case of a higher contribution by the employee, the company will not match the excess.
Attract new talent: Employees will be able to secure their future and retire at the expected time, which will help you help them complete their cycle within the company and you can bring in new talent with fresh ideas.
They help you keep talent: In many cases companies use contribution schedules according to the permanence of workers in the company. So if you want to get 100% of the money the company has contributed to your fund, you must meet a specific time of service within the company.
A typical example is that the company's contributions are divided over a five-year period. The company would contribute 20% annually, so if you retire after 2 years you would only receive 40% of the money the company would contribute to your retirement fund.
The best way to establish your company's bottom line?
In Smartkeep we help our clients through a platform called Gusto. We are in charge of parameterizing the fund and the deductions, so we automatically withhold and invest the contributions of each worker.
For 2022, the contribution limit for an individual to 401(k) plans is $20,500 ($27,000 for those age 50 and older) and the limit for IRA plans is $6,000 ($7,000 for those age 50 and older).
It is important that the system is transparent and, as far as possible, automated. And that you take into account the limitations on contributions to retirement plans.
If you want to learn more about how you can structure a retirement plan that will help you attract the best talent, be sure to contact us.
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