A Matching 401k plan is a retirement savings plan offered by many American employers. The employee who signs up for a 401(k) agrees to have a percentage of each paycheck paid directly into an investment account. The employer may match part or all of that contribution. The employee chooses from investment options.
Employer matching 401(k) contributions means the employer contributes money to their employees’ retirement savings plan typically based on the annual contribution. Depending on term limits employee contributions can be matched in a few ways. The most common way employers match is as a percentage of employee’s contributions up to a specific portion of the total salary. Some employers may match employee contributions up to a certain dollar amount independent of employee compensation.
Here are a few reasons your company should consider offering a Matching 401k plan in its benefits package.
Helps Recruit Talents:
Fun perks such as ping pong tables, happy hours, and stocked kitchens can be gratifying in the short-term, top employee candidates are most interested in long-term benefits. These candidates are evaluating a company’s 401(k) plan offering when choosing where to apply to or deciding between job offers. Offering a high-quality 401(k) plan is an essential part of your benefits package.
Employer Tax Benefits:
While it is commonly known that the employees won’t pay taxes on matching contributions until they are withdrawn in retirement, the employer also gets tax benefits. Employers matches can be taken as deductions on their federal corporate income tax returns. They are often exempt from state and payroll taxes as well.
Helps With Employee Morale & Retention
401k benefits packages can help retain top talent and are typically a lot less expensive than needing to replace an employee. Employees could leave their current employer for a similar job if it offered better retirement benefits. Whether you're recruiting or seeking to keep your current employees, a 401k can be a terrific incentive to stay at a job when good matching is offered.
LHUI can help you plan and develop the right Matching 401k plan as part of your employee benefits. Our team of insurance brokers in Seattle, WA can help you decide and develop a comprehensive employee benefits package for your employees. No matter the size of your business, we will work alongside you to meet all of your coverage needs with creative solutions and expert guidance. Schedule a consultation with us today!