Implementing a retirement program for your company is a significant step in attracting and retaining top talent, affording your employees long-term financial benefits, and scaling your business overall. Still, the features and benefits of retirement plans vary by business based on several factors. Which ones should your company consider? We’ll explain what small and large businesses should think about when designing a successful program.
Employee and Company Goals
Your goals are the foundation for designing a retirement program that specifically meets your business’s and employees’ needs. Begin by outlining your goals—what you want for your company and what you want for your employees.
In addition to providing for your employees, you might consider the current stage of your business cycle. For example:
A smaller, family-owned business thinking about changing leadership may be concerned with how the retirement program will affect their tax and succession planning.
A startup enterprise may want to design a 401(k) plan for attracting and retaining experienced talent.
An established company may focus on updating its current plan to meet new compliance standards.
Your employees may want or need:
The empowerment to retire when they choose
Retirement education and personal financial coaching
Plan Contribution Requirements
There are a wide array of retirement programs available to serve your employees well. The plan or plans you select will be based on your goals and operational costs versus the required contributions to maintain compliance. Whether you’re the owner of a large or small business, there may be a significant range in salaries among your employees, which will determine plan participation and if you’ll meet a plan’s contribution requirements. Here’s what you should consider:
Identify employees or divisions of employees that won’t participate in the primary retirement program. Excluding part-time employees or C-Suite executives, for example, may reduce your overall plan costs or change your contribution requirements.
There are specific IRS requirements that ensure retirement plans are balanced and mutually benefit all employees. For example, in a small business with few employees, if upper management maxes out their contributions while hourly employees contribute at a lower amount, it might disproportionately allocate plan funds to higher-paid employees, and corrections would be required to balance the plan. Review plan options to ensure you meet contribution requirements to uphold compliance standards.
Technology and Logistics
Logistics and technology are other factors that will determine the success of your retirement program. For example, how will you deliver plan disclosures and employee education?
Large companies: you might be able to rely on resources such as email or a benefits website to sufficiently deploy annual disclosures and employee education. You may require additional planning for an in-person group training, while one-on-one employee meetings may not be plausible at all.
Small and family-owned companies: you may be able to distribute required documents and provide group and individual employee education via individual and/or in-person communications that require fewer logistics. Just be sure to keep a record of communications.
From your business size to what technology you use, it’s no wonder that retirement plans are highly customized to the individual company. At RWM, we call it a job well done when both employers and employees win. If you’re ready to implement a retirement program that creates value for your employees while also meeting your needs as the owner, we can help. Contact us if you have questions about designing or updating your retirement program.