Potential Tax Savings for Small Businesses

With employee retention becoming more difficult but no less crucial, small employers who decide to offer a retirement plan such as a 401(k) (or 403(b) for non-profits) may give themselves an advantage – and a tax break plus a recruiting tool. Obviously, consulting with your financial advisor is necessary, but some of the potential benefits to the employer are these:

• Deductions for matching contributions – and potentially even more for profit-sharing contributions

• Safe harbor contributions (specific formulas are required to qualify)

• Small employer pension plan start-up credit

• Automatic enrollment credit

• Dollar-for-dollar tax relief

A number of vendors offer plans that will easily integrate with most payroll programs, simplifying the process and reducing the opportunity for errors. Employers who might be interested should consult with their accountant/tax advisor.

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