Even in the midst of high unemployment rates, it can be difficult to find and retain the best workers to make your business go. The old adage that good help is hard to find remains true today. So engaging employees in ways that build loyalty and keep them around longer is critical to every small business in America. One of the most successful ways to engage is to offer your workers a good 401(k) plan.
There are lots of 401(k) plans for small businesses out there. The task is finding one that meets the needs of your company at a price that guarantees your employees still make money as long as the plan performs positively. At BenefitMall, we partner with Plan Administrators, Inc. to provide a small business 401(k) plan for our clients.
It has been our experience that engaging employees with a 401(k) plan is a multi-step process:
Offer Enrollment as Soon as Possible
There's an old saying in the world of retirement planning that suggests your most important asset is time. In other words, having the most time possible for earning returns on your investments greatly increases the chances of reaching your retirement goals. This suggests that the first step for small businesses is to get a 401(k) plan set up quickly so that employees can begin enrolling as soon as possible.
Consider this: an employee that has 40 years to save for retirement can be more conservative in his/her investment approach so as to mitigate risk. By contrast, an employee that has only 10 or 20 years to save must accept more risk in exchange for the potential of earning higher returns. Giving your employees the earliest opportunity to invest in a small business 401(k) plan gives them more time to save with less risk involved.
Encourage Sufficient Contributions
The next step for employers is to encourage enrolled workers to make sufficient contributions to their plans. Obviously, every employee's goals will be different; those goals need to be accounted for in every aspect of financial planning. Yet the principle of sufficient contributions is the same for every worker. Employees need to be contributing enough to ensure that their 401(k) plans grow commensurate with their retirement goals.
Make Wise Investment Choices
The third step involves responsibilities for the 401(k) plan administrator, the company, and workers who invest in the plan. It is all about making wise investment choices. Plan administrators need to be held accountable by their clients for the investments they offer. Small businesses need to work with plan administrators to make sure the most attractive investments are included in the portfolio presented to workers. Finally, workers need to assess investment options annually to ensure their money is going to the right places.
Preparing for Retirement
Finally, workers need to be made aware of their options as they close in on retirement. Because 401(k) plans for small business must comply with federal and state laws, plan participants need to know how they can access their retirement funds legally and with as few associated costs as possible.
Small business 401(k) plans offer a very effective way to engage with employees and build loyalty. If your small company can afford a plan and does not yet have one, we urge you to consider getting started right away. BenefitMall can work with you to set up a plan that will afford you the same kind of personal attention and reliable service you have come to expect from our other products. Contact us today so we can start working on your plan.