By offering a 401(k) plan, companies can help workers take the first step towards getting retirement ready and preparing for the future.
1. Attract and Retain Employees
These days potential employees are looking for many things when considering a new job. Items like a competitive salary, acceptable healthcare coverage and a retirement plan have become critically important in their decision-making process. Workers have many concerns about their future which causes stress and can distract them from performing their job well. In fact, 72% of employers say stress and/or burnout are a challenge for their organization.¹ A well-designed retirement plan can make a business’ workforce stronger by attracting and retaining motivated, productive workers with financial benefits they value.
2. Increase Employee Engagement
Today’s employees are struggling to make ends meet let alone save for retirement. 79% of employees see a 401(k) or similar retirement plan as a “must have” benefit and it is ranked second behind health insurance for Gen X, Millennials and Gen Z workers.² Many employees are financially overwhelmed, living from paycheck to paycheck with little retirement savings and no emergency fund. Companies that choose to offer a retirement plan can have a big impact on their employees’ futures.
3. Potential Tax Saving Advantages
As a business owner, retirement plans enable you to receive a possible tax credit of up to $500 for startup administrative costs each of the first three years of the plan³. There are also potential tax deductions for offering an employer matching contribution. And participants who make pre-tax 401(k) deferrals lower their taxable income and may be eligible for a tax credit.
4. Today’s Technology Makes Plan Administration Easy
Today, retirement plans are typically designed to be easy to set-up, administer and maintain. Many retirement plan providers offer an automated process for handling complicated and time consuming plan administration tasks, helping to reduce the risk of errors. Real-time data integration enables businesses to save time and money on plan administration and minimize fiduciary risk. And today’s 401(k) plans typically allow employees access to their accounts online 24 hours a day, 7 days a week.
5. A Financial Wellness Program can Help Increase Employee Productivity
The first step toward financial wellness for employees is offering a solid and affordable retirement plan. Financially stressed employees are less productive at work and can cost their employer productivity and money. According to one study, one of the five key areas that employers can address to create a more satisfying experience for their workforce was wellness programs and benefits. In fact, employees were 1.6 times more likely to stay with their employer if they were satisfied in this area.⁴ By offering a 401(k) plan, companies can help workers take the first step towards getting retirement ready and preparing for the future. When employees are secure about their financial well-being, they will be less stressed and more productive.
For more information about ADP retirement plans or how we make them easier to manage, please contact your ADP Registered Retirement Services Associate or visit us at: www.adp.com/401k.
This article originally appeared on SPARK powered by ADP.
1 20th Annual U.S. Employee Benefit Trends Study – Metlife, 2022.
3 Please consult your tax or legal advisor to determine if you are eligible for this federal tax credit.
4 20th Annual U.S. Employee Benefit Trends Study – Metlife, 2022.