I decided to do some research on the number of small companies are offering their employees a 401K retirement savings vehicle. As our readers know, a 401K allows you to both save for retirement, as well as defer taxes on the portion of your salary you contribute to the 401K. In addition, you pay no taxes on the earnings on those contributions until withdrawn. Unfortunately, there is not much data out there, but I did discover a report from the General Accounting Office.
Here are a few data points from their research:
- Companies with 1 to 4 employees: Only 5% sponsor a 401K plan
- Companies with 5 to 11 employees: 18% sponsor a 401K plan
- Companies with 12 to 25 employees: 26% sponsor a 401K plan
- Companies with 26 to 100 employees: 31% sponsor a 401K plan
I found this information extremely disappointing, in that people are far more likely to set up a retirement savings plan through a Company sponsored plan with automatic payroll deduction. Companies can choose to match a portion of their employee’s contribution, creating a bigger incentive for employee participation.
I encourage Company owners to please consider offering a 401K savings plan for your employees. It is good business, and helps you attract and retain good employees.
We understand how busy you are, and how daunting the setting up of a 401K can be. CPA Accounting And Tax Solutions can help you with all your Accounting, Bookkeeping, Payroll, and Tax issues. We can help you set up a 401K, and any other type of Qualified Retirement savings plan.
Please don’t hesitate to contact us for a free consultation on your current situation.
CPA Accounting and Tax Solutions: 239-596-6050, firstname.lastname@example.org