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Why should my Small Business offer a 401k plan to employees?
Home » Small Business » Small Business 401k » Why should my Small Business offer a 401k plan to employees?Along with health insurance, 401k plans are the most common benefits that companies offer to their employees. Why do so many businesses offer this benefit?
Like all benefits, the offer of a 401k plan helps employers to attract and retain top employees. A 401k plan (especially one to which the employer also contributes) is, in essence, additional salary for an employee. All things being equal, most job applicants will gravitate towards employers with a complete set of benefits, including a 401k plan.
In addition, a 401k plan can provide substantial tax benefits for your small business. The IRS allows businesses to make tax deductions for contributions to employees’ 401k plans.
Finally, 401k plans benefit the morale and security of your employees. In most cases, 401k plans put everyone from the new hire to the tenured executive in the same boat—everyone has something vested in the soundness of the company’s plan, which can increase the sense of team unity. Team morale also improves when a 401k plan reminds employees that the company cares for them and provides for them. In a small business in particular, this reminder is important, because you want to create a family atmosphere. A 401k plan shows employees that you want to provide for them, not just pay them what you owe them.
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