What Employees Should Know about Your Company Retirement Plan
One great benefit that you can offer your employees is a company retirement plan. By doing so, you can help your employees to manage their money and set aside sufficient funds for their retirement, while doing the same for yourself. If you’re interested in setting up a company retirement plan, you have some planning and preparation to do. Here are a few things that employees should know about your company retirement plan.
Incentives for Contributing
First off, your employees should know about the different incentives that are available to them for contributing to the retirement plan. Around 80% of full-time businesses in the USA have company retirement plans available, but only 66% of their employees contribute to those plans. So, if you’re wanting to encourage your employees to contribute, make sure that they are incentivized to do so. One of the best ways to do this is to offer to match their contributions to their retirement fund. It is also important to make sure that your employees are being paid enough that they feel that they can set aside money in their retirement plan.
Rule and Limitations
Next, your employees should know the rules and limitations behind your company retirement plan. For example, if you are using a 401(k) retirement plan, they need to know how much they can contribute. Employees can contribute up to $20,500 to a 401(k) plan for 2022. It is important that your employees know the minimums and maximums for their contributions, and any other rules that apply, so they can budget out their monthly contributions to the plan.
Finally, you and your employees should be aware of some of the tax benefits that might come to you by contributing to your company retirement plan. When you contribute some of your salary money to your company 401(k) retirement plan, it isn’t taxed. This means that your taxable income is decreased, which will lower the amount of taxes that you end up paying. So, remember that there are additional tax benefits that you can access when you and your employees have a company retirement plan in place.
So, if you’re trying to get more of your employees to contribute to your company retirement plan, remember that there are a few things that you should teach them. If they’re aware of the incentives for contributing, rules and limitations, and tax benefits, they’ll be more likely to participate in the program. The more employees that you get to participate in your retirement plan, the more successful it will be for your business.
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