In the past, group 401(k) plans were only available to large employers. However, that’s no longer the case. With the introduction of Pooled Employer (PEP) 401(k) plans, employers of all sizes have access to retirement accounts to help their employees save for the future.
What is a 401(k)?
A 401(k) is a company-sponsored retirement account that is offered as a benefit to employees. Eligible employees can designate a portion of their income, set aside on a tax-free basis, to go into their 401(k) account. This money is then available to the employee when they retire, as long as they meet the requirements associated with the account.
Employers may match contributions made by employees up to a certain amount. For example, a business may choose to match 3% of contributions. For every dollar an employee sets aside from their own paycheck, an employer would match that amount up to 3% of their salary.
Contributions made to Roth 401(k) accounts take place with post-tax income, while traditional 401(k) contributions are made on a pre-tax basis.
Benefits of Offering a 401(k)
By increasing your benefit offerings with the addition of a 401(k) plan for employees, you can enjoy a number of appealing benefits:
- Support employees in their financial goals: Preparing for the future is the best way to increase the chances of financial security. Offering a way to save money for retirement supports your employees in their efforts to prepare.
- Enjoy tax advantages: Business owners may qualify for tax credits and deductions when offering 401(k) plans.
- Create a competitive benefits package: Hiring and retaining employees is a challenge in today’s market. A competitive benefits package that includes a 401(k) is a must to keep employees happy.
Payroll People PEP 401(k) Plan
The PEP 401(k) plan was established under the SECURE Act (Setting Every Community Up for Retirement), which allowed unrelated employers to pool assets into a larger plan. It reduced liability for employers while making this retirement benefit available to a wider range of organizations, regardless of employee count.
At Payroll People, we offer a PEP 401(k) plan that’s easy to implement. We partner with VOYA, a trusted name in retirement planning, to ensure high-quality service and accurate plan setup. The administrative costs are streamlined and competitive, and you can choose from flexible plan designs to accommodate your business needs.
When you’re ready to provide a valuable benefit to your employees, helping them to prepare for their futures, contact us to learn more about establishing a PEP 401(k). You can also learn more by clicking here.
