One important benefit that small business owners should consider offering to employees is a retirement savings plan.  There are many types of retirement plans that can be offered, some that are free and some that will cost a little money.  It’s important to research and consider what type of plan works best for your company.

Here are a few of options:

  1. Traditional 401(k) plan – This plan allows employees to contribute tax-deferred funds towards their retirement.  The funds can be deducted pre-tax from the employee’s paycheck and deposited into their retirement fund by their employer or plan administrator.  In 2013, employees can contribute up to $17,500 to their 401 (k) plan.  Employers can choose to contribute as well.  Many choose to match their employee’s contributions up to a certain percentage of their income, which employees see as a great benefit. This type of plan must meet strict IRS guidelines, so it is best administered by a financial professional.  So, small business owners should consider the administrative cost before choosing this plan.
  2. An SEP – A Simplified Employee Pension Plan allows employers to make contributions directly into an employee’s IRA fund.  Employers can contribute up to 25% of the employee’s salary.  In 2013 the contribution limit is $51,000.  The downside to this plan is that employees are not able to make any contributions.  The upside is that these plans are much easier to administer than 401 (k) plans.
  3. Employee IRA Contribution – Employers can deduct funds from an employee’s paycheck and deposit the funds into the employee’s IRA fund for them.  In this case, the employer does not contribute anything.  Many employees still see this as benefit, though, because the funds are being automatically deducted and invested for them.


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