With unemployment at record lows, economists continue to be surprised by the number of new jobs being created each month.  One explanation is that previously displaced workers are now coming back into the work force.   Part of that group are older workers that are returning to or remaining in the work force.  Many of these people either have not saved enough for retirement or are unsure whether they have.  A recent poll found that 23% of all workers and 20% of workers over age 50 do not expect to ever stop working.  Another 25% plan to continue to work past the normal retirement age of 65.  In short, American workers, in particular those over 50, do not have enough savings to retire.

While working well into the golden years may not seem like such a bad idea to some, experts are concerned.  In reality, many of these people will not be able to continue working in their old age.  Some will be injured or sick.  Some will need to become caregivers for older parents or spouses who are sick or injured.  And the truth is, deteriorating physical and mental skills in old age will affect their ability to perform their jobs.  This in turn will put employers in the uncomfortable position of dealing with performance issues with long time employees.

In light of these facts, it is increasingly important for employers to educate their workers about saving for retirement.  Equally important is providing a vehicle for doing this by offering a 401k plan that allows employees to contribute up to $19,000 annually from their pay check. (Employees 50 and older may contribute an extra $6,000 each year.)  These payroll deductions can be either the traditional pre-tax or Roth contributions.   With the assistance of the plan’s financial advisor, employees can then direct their contributions into a diverse selection of mutual funds.  Employers may elect to make contributions as well, but that is not required. 

One more reason small businesses should consider implementing a 401k plan is that is one of the most valued benefits for employees and is a tremendous tool for recruiting and retaining workers in this very tight labor market.  Still, implementing a 401k can be a daunting task for small companies with no experience with this.  Hiring an attorney to properly draft the plan documents.  Selecting an administrator to hold and manage the investments, maintain the records, complete annual compliance testing and government filings.  Finding a financial advisor who will serve as a fiduciary and conduct employee education and enrollment meetings and provide investment advice.

Of course there is a better option!  Total Team Solutions offers a turn-key solution that can be implemented in one week with no cost to the employer.  Key features such as eligibility, company contributions and vesting schedules are fully customizable.  Plus, you get the benefit of having someone with more than 30 years of experience managing the plan for you so you can focus on managing your business.

Need another reason to start a 401k plan?  New legislation provides for a $500 tax credit for companies that setup a new 401k plan!

For more information on how Total Team Solutions can help you implement a 401k plan for your company, contact John Morlock at 800-836-9678, ext. 5, or email him at jmorlock@ttspro.com.