While many businesses provide important employee benefits such as health care, dental, vision, sick days, paid time off, and 401(k) contributions, other businesses choose to offer additional company perks as a way to set themselves apart. Offering more job perks is a way for employers to increase their current employees’ job satisfaction while attracting new workers who will appreciate that you have the best company benefits.
What is a 401(k) retirement savings plan?
A 401(k) is a retirement savings plan that employers offer their team as a financial benefit for working at the company. The U.S. government established the 401(k) to incentivize workers to save for their retirement.
Employees voluntarily have a certain amount deducted from their paychecks each pay period to go toward their 401(k) savings accounts. While employees usually choose how much they’d like to deduct from their paycheck, they often have a limit on how much they’re allowed to contribute.
Employers can offer one of two plans: a traditional 401(k) plan or a Roth 401(k) plan. For traditional plans, 401(k) withdrawals are taxed at the employee’s current income tax rate. Roth 401(k) withdrawals aren’t taxable if the 401(k) account is five years old or older, and the employee is over 59 years old. There are specific regulations to follow regarding how much and how often an employee can withdraw these funds for their 401(k).
Many employers use 401(k)s as an employee benefit for working at the company and as an incentive to keep long-term employees. Some employers require employees to work at a company for a certain amount of time before they can start contributing to a 401(k).
Employees can choose specific types of investments from a selection their employer offers. Some of these investment types may include stock and bond mutual funds, target-date funds, guaranteed investment contracts (GIC), or the employer’s company stock.
The most common 401(k) matching contribution is an employer contribution of 50 cents for each dollar an employee contributes, up to 6% of the employee’s pay. This is typically considered a generous matching contribution since the average matching contribution is 4.7% of an employee’s salary.
Employee Recognition Programs
Every employer wants the most out of their workforce, and implementing a recognition program that makes sense is very important. Employees see what others are doing and recognize they want to follow that behavior. Do not recognize employees who do not do a good job. This causes dissent and harms morale.
More Health-Saving Benefits
Employees are interested in benefits that will ultimately lead to cost savings. That may include support tools to give employees confidence in picking compatible plans for their Health Savings Account (HSA), concierge tools for streamlining and reducing healthcare spending, and disease management plans, such as point solutions for cancer treatment. The offer of life insurance, pension, and retirement plans, mandatory paid time off, and mental health assistance rounded out employees’ top preferred benefits.
The bottom line is you must be competitive when it comes to compensation, benefits, and recognition, or you will experience high turnover and outrageous new employee training costs.