401k Day is an annual event that celebrates the 401(k) retirement savings plan. It is celebrated on the Friday following Labor Day every year. But how practical is it for small business to offer a 401k plan to employees?
401k Day is an annual event that celebrates the 401(k) retirement savings plan. It is celebrated on the Friday following Labor Day every year. The day was first celebrated in 1992 by AARP, and it has been growing ever since. The goal of this day is to raise awareness about the importance of saving for retirement, and how to do so in a way that best suits your needs.
What are the Benefits of Contributing to Your 401k?
Contributing to a 401k is a great way to save for your future. It's an investment that will grow over time and provide you with income in retirement. And the sooner you start, the more money you'll have when it's time to retire.
Some of the benefits of contributing to your 401k include:
- Tax-deferred growth: You won't pay taxes on any interest or dividends until you withdraw funds from the account at retirement age. This can help you save more money for retirement since your investments can grow faster without taxes eating away at it.
- Tax advantage: You can deduct contributions from your taxable income, which reduces your tax bill and helps lower the amount of income that is subject to Social Security and Medicare taxes later on in life.
When Should People Start Contributing To Their To their 401k Plans?
Every financial advisor will tell you that the best time to start contributing to your 401k is as soon as you start your first job. You can contribute up to $18,500 per year and it's never too late to start. Time in the market is everything. The sooner you start contributing, the more money you will have when you retire. Even if you make a small contribution now, it will add up over time and have an impact on the size of your nest egg in retirement. The compounding effect of starting early is simply astonishing, and has the potential to make a huge difference to the amount you receive in retirement.
Can a Small Business offer a 401k plan to its employees?
Most people know that small businesses can offer 401K plans to employees, but the vast majority do not. Traditionally, this has been due to the prohibitively high administrative overhead and running costs. However, the industry is evolving and there are now managed 401K plan services that are so low cost and low overhead that they are within reach of practically every small business, even if they only have a couple of employees.
Offering a 401K plan is a valuable benefit for your employees - it is arguably the most important benefit after health insurance. Especially in this job market, making a 401K plan available to your employees can be a powerful advantage in the competition for talent. So if you are struggling to hire the people you need to grow your business, you should seriously consider it.
Northstar makes it easy and affordable for smaller businesses to offer a 401K plan. With high quality, modern 401K services now available at a fraction of the cost of traditional plans, and managed services taking away the administrative pain, the timing has never been better. So yes, now is the time to get on board and enjoy the increased loyalty and recruitment advantage that having a 401K plan can bring. Book a free discovery call with us today, and I guarantee you’ll be amazed how easy and affordable 401K plans have become.