• Chris Simpson

Benefits Of Offering A 401(k) Plan

As an entrepreneur or small business owner, it can be difficult to constantly be in the driver’s seat when it comes to making decisions. For the most part, every decision related to the business is going to come down to your own judgment. With that being said, we want to offer some advice on one of the most widely asked questions by small business owners.

Should I offer my employees a 401(k) retirement plan and what are the benefits of doing so?

Tax incentives

Your contribution comes out of your paycheck before income taxes are deducted. This means that your taxable income is lower which in turn will lower your tax bill. This turns it into a win-win for both you and your employees!

Employee retention

Employees like to see that their company has their best interests at heart. By offering a 401(k) plan it shows that you’re committing to them for the long haul. This will make them more inclined to return the favor.

Additionally, employee retention is also very valuable because it costs time and money to hire and train new employees. If you’re constantly turning over your workforce then you might not actually be saving as much money as you think by not offering a 401(k).

Attracting top talent

As the majority of employers offer a 401(k) plan, offering one probably won’t separate you from other employers when it comes to attracting top employees. However, not offering a 401(k) could likely be a deciding factor between you and your competitors. You don’t want that to be the piece that encourages someone to work for a competitor.

It’s a little bit like writing a resume. Having a clean, professional resume isn’t necessarily guaranteed to land you a job offer. However, having a messy, unprofessional resume is a surefire way to not even get an interview.


Your employees’ contributions to a 401(k) plan (as well as any investment gains or earnings are tax-deferred until they are distributed. For most people, income tax rates are lower at retirement because of lower-income or residence in a state with no or lower income tax.

Making a difference for your employees

It may sound a little corny but it’s sure to help you sleep a little more soundly at night knowing that you’re doing all you can to set your employees up for a successful future. Doing so will surely come back to reward you in a number of ways.

We hope that you found this article valuable in understanding what a few of the benefits are for employers who are interested in offering a 401(k) plan to their employees. If you’re interested in learning more just click the link below to schedule a complementary 45 minute consultation. My partner Hunter Lowry and I are experts in the field of implementing tax-efficient strategies and the Calsavers mandate.

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