As with many other things, myths around retirement plans are also flourishing. In order to successfully combat these tricky, perpetuated falsities, it is extremely crucial to understand how exactly retirement plans work.
Most of you might think that cost is the most common and only “myth” when it comes to 401(k) plans, but it’s definitely not the only roadblock as the costs of retirement plans continue to drop gradually. The bigger issues that are prevailing showcase misperceptions and just being unaware of the facts.
Keeping this fact in mind, it’s time to uncover five most common myths in regard to small businesses and 401(k) limits.
Myth 1: All 401(k) Plans Are Similar
Although every 401(k) plans look similar just because they are all retirement saving vehicles, but not all plans follow the exact same formula. For instance, some employers offer matching contributions for 401(k) retirement plans; some offer a certain percentage match and some don’t offer contribution at all.
Myth 2: 401(k)s Are Extremely Hard To Administer
This is definitely not true. Setting up a 401(k) plan is much easier than ever as everything is done online and an online and paper-free system is not only easy but also much simpler to manage. It is just like setting up your mail, or even easier than this.
Myth 3: 401(k)s Are Just Too Expensive
Not anymore. Small companies can easily set-up retirement benefits at a fraction of the cost which they think they are going to spend on it. Employers must also keep in mind that their contribution to the 401(k) plans is tax-deductible for the company.
Myth 4: 401(k) Plans Are Only Beneficial To The Individuals (Employees) Investing In Them
This is not the scenario as the obvious winners in 401(k) plans are the employers, plan administrators, and the mutual fund companies who feature their funds in the plans. Along with that, employers are also enjoying as providing 401(k) plans are much more affordable than providing pensions to the employees.
Myth 5: Small & Medium-Sized Companies Don’t Benefit From 401(k) Plans
Small business owners think that 401(k) plans are only for big organizations and there’s nothing for them in there but the truth is that businesses of any size can benefit from taking part in 401(k) plan. As per IRS section 401(a), any kind of business can create a 401(k) plan, excluding the state and local govt. entities.
Has any one or several of the above mentioned myths been stopping you from providing a retirement plan to your employees? Then you must clear your doubts and have a proper understanding on the same. To remain competitive in the market and engage/retain/attract employees, it is important that retirement benefits are added to their benefits package. And then of course, there’s TeemWurk Ben Admin solution which will help you administer these benefits efficiently and timely so that you don’t fall into the pits of heavy penalties.