Types
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THE 401(k)
MOST POPULAR CHOICE
More likely than not, your employees are familiar with 401(k) defined contribution retirement plans. In fact, surveys suggest that if you were to ask them, 401(k)s would rank second amongst a long list of company-sponsored benefit plans they value the most.
The 401(k) allows eligible employees the opportunity to contribute a portion of their gross wages into a tax-deferred account in the Plan. The funds contributed are invested at the employee’s direction, and while their investments grow they don’t pay taxes on their earnings.
To understand why this plan type has become so popular, we have to look at its advantages:
- Any business, regardless of organizational structure, can establish a 401(k) Plan. Whether you're a sole proprietor, a C-Corp, a Partnership, or a Non-profit you can take advantage of this Plan.
- Within certain guidelines, as the plan sponsor you set the eligibility requirements of the plan.
- You can match your employees' contributions.
- Tax advantages available to plan sponsors.
- There are a variety of service solutions available for the Plan that alleviate you from the complexities of plan administration and maintenance.
A 401(k) Plan ultimately provides a flexibile and recognizable means for retirement savings--one which employees are certainly coming to expect from any employer.