Businesses: Tap into the benefits of a retirement plan

Does your business offer a retirement savings plan for employees?  If not, consider setting one up.  Changes in the tax law have made plans more attractive to both employers and employees.  Plans have higher contribution limits than before.  Plans for small businesses, including sole proprietors, can be set up with minimal cost and paperwork.  There are even tax credits available for small employers to help offset a portion of the plan's set-up costs.

Consider the benefits.  A retirement plan may be beneficial for several reasons.  It can help you to recruit employees, and it can be a valuable part of your overall compensation package.  You can help your employees by giving them a tax-advantaged way to save for their retirement.  A plan can also provide tax credits or deductions for your business.  Finally, it can help you provide for your own retirement.

To encourage retirement savings, last year's tax law increased the amount employees (including owners) can contribute to plans.  In addition, employees 50 and older can make catch-up contributions.  There is also a tax credit for lower-income employees who contribute to certain plans.

Understand your choices.  A variety of plans are available.  At the simplest, you can help employees invest in IRAs through payroll deductions.  Slightly more complicated, but still fairly easy to administer, are SEP IRAs or SIMPLE IRAs.  These plans allow the company to make tax-deductible contributions to employees' IRAs. Next come 401(k) plans, Keoghs, and other pension plans.

If your business doesn't provide some type of retirement plan, you may be missing out on a way to motivate and retain employees.  Even in today's job market, that can be a significant competitive advantage.