It's never too early to plan for retirement
401k plans are the most common type of employee-sponsored retirement savings systems. 401k retirement plans, sometimes also called 401k pension plans, allow you to save for retirement by investing your money – typically taken directly off of your paycheck – and deferring income taxes until the time when you remove the funds from the account. Some employers will even match employees' contributions to these plans, or provide profit-sharing contributions, making saving for retirement even easier.
There are several different kinds of 401k plans, and the one you choose will depend on your employer, as well as your retirement needs. Typically, participants in a 401k plan are able to choose which investments their money is put towards, which gives you a sense of control over where your money is going and how much you can earn from it. Talk to your human resources and payroll processing departments to get something set up.
Small Business 401k Plans
Small business 401k plans are specially designed for employers and employees of companies with fewer than 50 workers. They are especially valuable to employers in this situation because they provide a tax deduction for the business. The flexibility of a 401k plan is also valuable to a small business employer because they are typically transferrable to another company should an employee choose to leave. This reduces the amount of paperwork and administrative attention needed when an employee quits or is let go.
401k plans are also beneficial for small businesses because they usually allow the option to have the money invested in the company's stocks, which allows employees to save for retirement while supporting their own company, at the same time.
Choosing a 401k Provider
Choosing a 401k provider can be the hardest part about establishing a retirement savings account. Before you even start looking for a provider, you need to establish a written plan outlining which kind of 401k you and your employees are interested in (think flexibility, investment options, payment and payout options). Then, arrange a trust fund for the money to be deposited in and for investment earnings to be stored, and establish a 401k record.
When choosing a provider, you want to make sure that there are lots of options for your employees, and that the provider has a strong customer service basis that will allow your employees to be engaged in their retirement saving.