Hi, I’m Matthew Morrow. As a financial advisor, business owners invariably always ask the question: Why do I need a retirement plan for my business? It’s a great question, and one that we think we can answer in three quick points.
1. You Need to Be Saving for Retirement
Number one, probably most importantly, is you need to be saving for retirement. This gives you the opportunity as the owner, as well as employees, to save money. And as we all know, the earlier you start saving, the better prepared you will be for retirement.
2. Save Money with Tax Deductibles
Number two would be tax savings. This is an often overlooked feature of using retirement plan. You as a business owner can deduct the fees and costs associated with running a retirement plan, as well the contributions you’re making, the contributions your employees are making; those are pretax contributions for the most part. And they allow every dollar to save you money in taxes.
Take Advantage of Tax Credits
Further, if you’re starting a brand-new retirement plan, the IRS actually provides federal tax credits for up to the first three years of running the plan to help offset the cost of starting a plan.
3. Attract & Retain Talent
Third and finally, an important part to business owners is attracting and retaining talent. A retirement plan makes you more competitive. In fact, today many employees expect but their business will have a retirement plan available and that they will receive some type of employer matching contribution. If you use a retirement plan you can oftentimes increase productivity of your employees, provide incentives for matching contributions or profit-sharing contributions.
In summary: why do you need a retirement plan for your business?
- To help you and your employees safe toward your retirement.
- To save money on taxes.
- To attract and retain top employees to your business.