7 Ways to Make a Retirement Plan Work for Your Small Business

By Tommy Besselman / February 17, 2015 / Uncategorized No Comments

Small businesses may shy away from offering retirement plans because they fear they will be too expensive or complex. But if you’re looking to recruit and retain top talent, a strong benefits package — including a retirement plan — can make all the difference. There is a wide variety of IRAs and 401(k) options that may be appropriate for your business, depending on how many employees you have and their savings needs.

Recently I talked with John Lensing of Centura Advisors, a member of HR Solutions’ retirement team, about different ways small businesses can offer a retirement plan that works for the business and its employees. Here’s what he had to say.

Find a Strong Partner

The first step is finding a vendor that will help invest in your plan’s success, Lensing says. Some investment companies aren’t interested in working with small employer plans because the income is small, so find a company that has experience working with small businesses and meeting their needs. Your partner will be able to help you decide what kind of retirement plan will work best for your business and employees.

Understand the Costs

While administration costs can be a pain, especially when dealing with a 401(k) plan instead of IRAs, it’s important to remember that there are incentives as well. “The IRS helps out employers that want to set up retirement plans by giving them a tax write-off to offset those expenses for the first three years of the plan,” Lensing says.

Communicate With Your Employees

Being proactive in your communications will help your employees get the most out of the retirement plan you offer, and will help them understand its value. In addition to educating employees about the retirement plan, Lensing says there are a lot of legally required communications, too, so work with your partner to ensure you’re in compliance.

Be Patient

One of the biggest challenges of starting retirement plans is that, because they are built from the ground up, it takes longer for higher-paid employees to see the kinds of returns they want, Lensing says. “The individuals setting up the plan may feel as if they’re at a disadvantage,” he says, and may not even want to participate. Employ a strong benefits communication strategy to keep everyone involved.

Highlight the Plan’s Value

When a company offers a retirement plan, it helps employees save for their future without having to go it alone, Lensing says. “They may not consider themselves wealthy enough to invest with someone who wants to help them, but there are diverse options and freedom in a retirement plan, and when their employer helps them, that’s valuable.”

Make a Match

A few years ago during the financial crisis and slow recovery, employers weren’t putting up matches because they felt they couldn’t afford it, Lensing says. “Now, when I meet with clients, they’re saying ‘we have to have a match; we’ve had people ask about their retirement plans and what the match is.’ It’s huge for recruiting.” Setting a range of match options within the confines of the plan can help employees customize their retirement plans without breaking the bank.

Don’t Be Afraid

Lensing acknowledges there are a lot of moving parts to retirement plans, but says small businesses shouldn’t feel like the plans are huge monsters they can’t control. “It’s about understanding what you’re trying to accomplish and being proactive. And there’s plenty of help out there.”

Contact us for help determining which retirement solution is right for your organization.

HR Solutions is a human resources outsourcing firm based in Baton Rouge, Louisiana. We eliminate human resources headaches for businesses with 10 to 1,000 employees by handling their payroll, employee benefits, regulatory compliance and other staffing needs. Contact us to learn how we can streamline your company’s human resources function to save money and reduce risk.

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