How To Choose The Best Retirement Plan
Finding qualified employees is one of the biggest concerns for companies right now. According to a 2021 survey conducted by the Indiana Chamber of Commerce, 72% of companies reported that the supply of applicants does not meet needs and 60% left jobs open in the past year due to underqualified applicants. So retaining hard-working employees is paramount. A company-sponsored retirement plan is one of the most effective employee retention strategies businesses employ. If your business does not have a retirement plan, implement one, especially if you are worried about employee turnover.
The IRS encourages small businesses to set up retirement plans by providing tax credits for instituting this type of benefit for employees and tax deductions for contributions, but they do not spell out what is the best and how to choose one over another. Though there's no doubt offering a benefit for employees to save for retirement and reduce current taxable income provides a sense of financial security and assists in attracting and keeping better employees.
Once you've decided to offer a retirement benefit, determining which plan best suits your needs might feel challenging or complicated. Fortunately, knowing a few key factors will help you choose the appropriate plan (or combination of plans) that's right for your small business. Below are the most common objectives for employers to consider when deciding between various plans.
- Incentivizing employees
- Maximize retirement savings
- Manage costs and administrative complexity
- Optimizing income tax planning
Of course, these objectives are not all congruous, so use the chart below to help differentiate between the most commonly adopted defined benefit retirement plans and prioritize your goals.
If you still have questions after reviewing the guide. Contact one of the fiduciaries at the Hurlow Wealth Management Group. These financial advisors have helped small business owners compare options and implement retirement plans for more than two decades. Schedule a complimentary consultation today.