Small business owners probably think they have enough headaches already, what with meeting payroll, dealing with government regulations and pleasing customers.
Setting up a retirement plan for their employees is just extra red tape – and possibly expense – they can do without.
But creating such a plan is more doable than they may realize and even comes with benefits for the small business and its owner, says Andrew Denney, founder and CEO of Prosperity Financial Group (www.pfgmidwest.com).
“I’ve worked with some employee retirement plans where there was in excess of $500 million in the plan,” Denney says. “At the other end, I’ve seen businesses with as few as 10 employees set up a plan.”
Yet as a group, small businesses tend to forgo retirement plans.
For example, only 22% of workers at firms with fewer than 10 employees report having access to a workplace savings plan or pension, compared with 74 percent at firms with 500 or more, according to a Pew Charitable Trusts report.
Employee-sponsored 401(k) and IRA plans are among the more popular options for businesses that do offer a retirement benefit. Those savings plans allow the employees to deposit money routinely in the accounts with a...