Small Business 401k Plans

Written by Jacey Harmon
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Small business 401K plans are an attractive retirement funding vehicle for small business owners. Small business 401K plans are quality benefits that may attract potential employees to your business. They also have tax benefits for the owner and the business.

Employee retention is an important factor for a businesses success. The loss of employee experience and the excess costs involved with acquiring and training new employees has a negative effect on your business. One of the tools that businesses can use to increase employee retention is that of small business 401K plans. 401Ks let an employee save for their own retirement by putting away a portion of their salary.

An employer can offer a matching benefit with their 401K plan. The employer matches the employee's contribution up to a percentage of income. Most businesses that offer matching programs match between 4 to 6 percent of an employee's annual salary. The matching benefit with 401K plans is an attractive feature to offer employees. Contributions to 401Ks by the business for an employee are tax deductible.

Small Business 401K Plans for Owner Operated Businesses

Owner operated small businesses can take advantage of individual 401Ks. These plans are funded by contributions from the owner's salary and profits from the business. Since the individual 401K is intended for businesses that are owner operated, they allow for the profit sharing to equal the matching program with traditional 401Ks. The contribution is tax deductible from both the owners' salary and the business's profits. These plans have a high annual maximum contribution, offering an added incentive for owning your own business.


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