Make your employees stay through your retirement plan
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The word “retirement” sounds a little scary for most employees, especially when the job they have is not giving them much. People are not suited to just having a good salary that pays their bills. Common in families, the provider is not satisfied with just social security benefits or a good paycheck every month. The top two benefits employees seek are the paid vacations or holidays and medical insurance, and next to these are retirement plans, savings plan, and pension plans that are paid by the employer. So, have an edge in maintaining your employees for a long term basis by having a retirement plan as part of employees’ benefits.

As an owner of a small-scale business, you are now aware of the importance of making of a retirement plan for your employees. But how can you keep your finances intact while choosing from different options in the market? There are actually three options to choose from when you are starting to create one.

In creating a retirement plan, there are things that you might want to consider, like the goals to be met and how much the employer would like to spend. For a month, a smaller scale business that cannot afford spending on huge retirement fees can start from the Simplified Employee Pension Plan (SER IRA) or the Savings Incentive Match Plan for Employees (SIMPLE IRA). These two options are appealing to businesses having less than a hundred employees because these both have minimal costs. As the business develops, the owner can upgrade these plans into better and more comprehensive options for retirement like 401(k) profit sharing.

For the Simplified Employee Pension Plan (SER IRA), the employees are allowed to deposit money directly into the conventional retirement account and the employer is not required to give contributions. This is perfect if your business is small for there are no start up and operating fees for a conventional retirement plan. The employer contributions are tax deductible. And you must remember that only employees that have worked for you for the last three years and who have earned at least $150 are entitled to this plan. This SEP IRA is easier because there are no annual reports with IRS to file, no necessary plan documents, and contributions vary year after year as well.

For the Savings Incentive Match Plan for employees or SIMPLE IRA, which is another good start up, the employee is asked for a contribution and it is compulsory for the employer to have an equal contribution, which is up to 3 percent of the employee’s wage. The annual contribution for each employee amounts to $10,000 or $12,000 if the employee is 50 years or older, plus the employer’s matching contribution, which is three percent of the employee’s salary.

Profit-sharing and 401(k) plans give more control on the owner’s side as to how much and when the employee will be fully provided. Although the planning requires a certain cost for the owner’s side, an outside agency needs to conduct test and a documented plan. For 401(k) plan, this is applicable to companies with more than 25 people employed. You may choose between an employer contribution and a combined employer/employee contribution, but the amount should not be more than $44,000. This plan is somewhat expensive and annual fees to maintain are dropping because of the 401(k) providers’ competition.