Should You Have an Employee Retirement Plan?
Certified financial planner and vice president of Central Trust Co., Andrea McKinney, gives advice on the benefits of having an employee retirement plan.
Andrea McKinney is vice president and wealth management consultant for Central Trust Co. She is also a member of Rosie.
Win-Win. Offering an employee retirement plan is obviously good for the employee. But employers also benefit by more easily attracting and retaining quality talent. Many plans offer solid tax incentives, too. “Employers need to work with a specialist for plan design,” says Certified Financial Planner Andrea McKinney. To start, find an investment professional and ask these questions:
Which type of retirement plan is appropriate for my business?
There are many types of retirement plans such as 401(k) accounts and individual retirement accounts (IRA). Some are suited for sole proprietors; others are better for larger companies. Understand differences and potential tax benefits associated with each.
How will the plan meet my priorities?
Some business owners want higher contribution limits. Others might desire less plan administration. Employers should choose a plan that meets their priorities. “A retirement plan can be the best way to secure your financial future as well as [the financial future of] your employees,” McKinney says.
What are my responsibilities if I offer a plan?
Responsibilities change depending on the type of plan. Some require business owners to make contributions every year, despite varying levels of income. Others have the owner acting as fiduciary, meaning more liability and plan administration. Be careful to understand the owner’s obligation when choosing retirement benefits.