Department of Labor Issues Final Rule on Association Retirement Plans: What it Means for Small Business OwnersSeptember 16, 2019 2:04 PM
Retirement plans are one of the most valuable employee benefits offered by organizations today. According to the Society for Human Resource Management (SHRM), the vast majority of workers say having a retirement plan is critical to their overall job satisfaction. Perhaps that’s why this benefit is such a deal breaker for job hunters and one of the main reasons why so many workers stay with their current employers.
It can be challenging for small businesses, however, to manage the administrative costs and compliance requirements associated with offering retirement savings plans. Only 53 percent of small-to-mid-sized businesses offer a retirement plan, with approximately 38 million private-sector employees without access to one through their employers.
The good news is that may be about to change. In July 2019, the Department of Labor (DOL) clarified the definition of “employer” within the Employee Retirement Income Security Act (ERISA) in sponsoring a multiple employer contribution pension plan. In establishing the ‘final rule', which goes into effect Sept. 30, 2019, the DOL has made it easier and more cost-effective for small businesses to offer retirement plans to employees through Association Retirement Plans (ARPs).
After a great year, giving back to your employees can be very beneficial for your business. CNBC cites that “more than half of small business owners say that offering a [retirement] plan helps attract better employees.” A profit sharing plan is one way that you can use your business’ financial success to you and your employees’ benefit.
Americans work the majority of their lives with the hope of one day retiring and enjoying the fruits of their labor. Unfortunately, more and more people have to work well into their golden years without any end in sight. This is especially true for people that work for small businesses for the bulk of their career.
According to a Wells Fargo study, 37% of people expect to work until they die. That’s an alarming number, but one that you can use to your advantage.
Most people would rather spend their later years comfortably enjoying their retirement, so by offering a quality 401k plan, you give your business a step up in attracting and retaining quality employees.
Avoid Financial Confusion: Educate Your Group
Before we give you the key elements to a great 401k plan, it’s worth taking a moment to remind you that financial choices can be intimidating and confusing for many employees. One way you can help is by making an effort to ensure employees are educated about their choices. These resources will help make sure everyone is on the same page.