401K plan is established in 1978 and has gradually developed to be the primary retirement plan of millions of Americans. And it is expected to continually dominate the retirement industry for a very long time. 401K retirement plans for small businesses can greatly help to attract, keep and inspirit today’s human resources. However there are lots of myths surrounding it and they are given below,
It might have been true in the past. But nowadays there are lots of 401(K) providers who offer dedicated and less-expensive plans to small business owners. Also, you can offset the plan costs from the tax benefits provided by the government.
In truth, 401(K) is available to businesses of any size and this includes sole proprietorships. You can also start small in the beginning and expand the plan as your business grows. Even if you are a self-employed entrepreneur, there are dedicated plans accessible for you.
It is not necessary to be an expert in retirement plans for small businesses in order to make an investment. You can partner with a reputed 401(K) plan administrator to take the pressure off from you. They would choose the right plan that suits your requirements.
It is a common myth that it is important to have employer contribution. But it is not required if you cannot afford it. The only drawback is that this can decrease the amount earned by your employees. In addition to that, the employer contribution is tax deductible and can be very advantageous to both the parties.
This misunderstanding is the main reason why the percentage of companies with employees under 100 and provide retirement plan is just 13%. However, replacing an employee is no easy task and costly, considering the loss of customers and productivity. If you provide additional benefits to your employees, they are more likely to stay with your company.
So do not let these misconceptions hold you back from taking advantage of 401(K) retirement plans.