The concept of retirement is thrilling. Ideally, you will have more time for hobbies and recreation, the ability to travel and spend time with family. It can be a joyous time in life. Do your employees have the opportunity to save money for those years? Many employers choose to offer employees a voluntary retirement plan to help.
Sadly, the truth is that many Americans do not save enough for retirement. One reason for this is that they plan to rely on federal, state and local government pensions once they retire. However, studies show that a majority of the state retirement systems in 2016 had less than 80 percent of the funds required to pay benefits promised. Many are significantly lower than 80 percent.*With life expectancy on the rise, why not help your employees establish a voluntary retirement plan? They will be able to start saving now for those retirement years well before they get here.
What Retirement Plans Should You Offer Employees?
At First Financial, we offer three popular retirement plans that provide great benefits and peace of mind. We have a plan option for all your employees, whether full or part time.
- 403(b) Plan:This plan is available to non-profit and public school employees and can serve as a supplement to either a traditional pension, other retirement plan or as a standalone plan. It provides tax-deferred growth so there is no annual taxation on earnings for employees. Plus, plans offer competitive interest rates, and employees can choose from three investment options to further maximize their savings.
- 457(b) Plan: This plan is available to state and local government employees and includes many of the same benefits as a 403(b) Plan. Funds can be invested in a fixed annuity, variable annuity or mutual fund. Additionally, there is no penalty fee on interest or earnings for early withdrawal.
- 3121 Plan: This is a FICA-alternative plan for part-time, seasonal and temporary employees that replaces Social Security. As an employer, this means you will avoid paying the 6.2 percent Social Security contribution.
Keep Your Plans Compliant
Once you have decided to offer employees a retirement plan, your next question might be, “How do I administer these plans and make sure they are IRS compliant?” It’s important to have a solid provider in your corner who can provide you with sample plan documents and audits to set up your plans for success. As a company who has been doing this for more than 50 years, we are ready to assist.
*The Pew Charitable Trusts: The Fiscal Health of State Pension Plans; September 28, 2018