Should you offer a 401(K) match to your employees?

In today’s competitive job market, talent is king.

Companies that want to attract and retain top talent need to offer competitive benefits packages. One of the most important benefits that employees are looking for is a 401(k) plan.

Nearly nine out of 10 participants (88%) considered a 401(k) a must-have benefit when looking for a new job—second only to health insurance, at 90%—and more than three in four 401(k) participants would refuse a new job if it did not offer one, the Charles Schwab 2023 401(k) Participant Study found.

Here are our suggestions on when and how to offer a 401(K)

Decide what percentage of your employees’ contributions you will match.
Decide what type of 401(k) plan you will offer*
Decide how long an employee should work there before being given the 401K; depending on the size and budget you can hold off on offering to all employees, and instead, offer to those who have worked there for 2 years, for example.
Choose a trust to hold plan assets.
Prepare FAQ and employee handouts for your human resources department.
Ensure all who are eligible are aware of these benefits; create a strategy that focuses on ease of enrollment.

Here are some additional benefits of offering a 401(k) plan to your employees:

Increased employee satisfaction: Employees who have access to a 401(k) plan are more likely to be satisfied with their job.
Reduced employee turnover: Employees who have access to a 401(k) plan are less likely to leave their job.
Tax benefits: Employers can deduct the contributions they make to their employees’ 401(k) plans.
Increased employee productivity: Employees who are saving for retirement are more likely to be focused and productive at work.

What is the role of the employer in administering 401(k) plans?

Plan management
Plan selection
Cost management
Filing reports and forms with the government

Thinking about setting up a 401(K) for your employees or do you have questions about benefits? Contact us at [email protected] or visit https://www.lyceumins.com/coverage/employee-benefits/ to learn more.

Sources:

https://www.adp.com/resources/articles-and-insights/articles/s/setting-up-a-401k.aspx

https://www.paychex.com/articles/employee-benefits/employer-advantages-of-401k-plans

https://www.plansponsor.com/unitedhealth-group-insurance-tpa-umr-sued-by-dol/