As the unemployment rate has dropped, hiring has grown increasingly competitive – especially for businesses with highly-specialized positions. It’s important to understand how matching retirement contributions factor into the hiring process and how they can financially benefit your company. Here are a few reasons why offering a retirement match helps your business.
If you don’t offer matching retirement contributions, chances are your competitors do, meaning it’s more difficult to attract top talent. A full benefits package that includes a retirement match may prevent you from paying top dollar to win candidates who might consider a job offer from your competitors.
In order to reap the largest rewards attached to a retirement plan match, employees often must work for a particular period of time, known as vesting. This time frame encourages employees to stay and maximize their contributions to receive the best benefits. Since replacing a departing worker is expensive, reduced turnover brings cost savings.
Your finance department will love the savings received at tax time from your matching retirement contributions. Businesses can deduct every dollar they contribute toward employee retirement plans in addition to the tax savings employees reap for participating. Small and mid-sized business may also be able to deduct their retirement plan startup costs under the Credit for Small Employment Pension Plans Startup Costs.
In most states, businesses aren’t required to offer retirement plans for their employees, but that is changing. Seven states now have a government-mandated retirement option in place for residents, and in Oregon and Illinois, employers are required to enroll their workers in a plan. By having an employer-matched retirement plan in place, your business will be prepared if a mandate impacts your workplace.
By understanding the benefits of matching retirement contributions, your business can make informed decisions and save money. For further questions about matching or other questions relating to retirement plans, contact your plan advisor.