5 Ways a 401(k) Plan Can Help Your Small Business

By Stuart Robertson

The reality is that many businesses with less than 100 employees don’t offer 401(k) or any other retirement benefits. But the time is now to offer yourself and your business one of the most powerful—if not the most powerful—way to save tax deferred. That, of course, is a 401(k) plan.

Sure, we may be a little biased since this is what we do to help people save. But we do this because we truly believe it’s one of the best ways to get on the path to financial freedom. Ready to get started? Here are our top 5 reasons to start a 401(k) plan and check it off your resolution list. You and your employees will surely be glad you did:

  1. Participants can now put up to $23,000 into their 401(k) account, or $30,500 if you’re 50 years of age or more. Participants can choose to either contribute tax-deferred and lower this year’s taxes, put taxed money into the Roth 401(k) feature for future tax needs (without any limits based on your income unlike a Roth IRA), or do some of both.
  2. The amount you can save isn’t just how much you contribute individually up to the limit mentioned above. If an employer offers an employer contribution in the form of a match or profit share, an individual may put up to $69,000 per year in a 401(k) plan. That’s a lot of moolah and tax savings. Solo 401k plan users who are both the employee and employer tend to like this since they can leverage this to both save for retirement and manage this year’s taxes.
  3. Employer matching and profit sharing is typically 100% tax deductible, so while offering an employer contribution or match is completely optional, it tends to not end up costing the firm. However, it is a cash flow consideration.
  4. The price for 401(k) plans for any size office are really affordable thanks to providers (like us) that are able to take out many costs and expenses that are common with more traditional providers. Plus, there are tax credits and tax deductions that most small businesses qualify for that can further help minimize the cost to offer a plan.
  5. If you need access to up to $50K of these funds in an emergency, a 401(k) plan loan is an option you can consider.

If you get started now, you’ll have all of 2024 to make the most of your saving and tax benefits 401(k)s offer. Plus, there’s no better way to show your employees goodwill and appreciation than by getting them set on the right path to retirement.

Meet the Author

Our low-cost 401k plans are easy to setup online and are supported by our 401k advisors and specialists. ShareBuilder 401k serves small business and medium-sized companies, as well as the self-employed. We offer Roth 401k, Safe Harbor 401k, Traditional 401k, and Solo 401k options. Your 401k plan is paired with investment management expertise and employee education to help you save more.