It’s estimated that Americans will need 70-90 percent of their pre-retirement income to maintain their current standard of living once they stop working, yet fewer than half have actually calculated how much they need to save.

Reality: As a small business owner who employs these U.S. workers, you can directly make an impact on helping them save. That’s why retirement plan options have become one of the more attractive benefits for the employees you’re trying to hire or keep around.

According to the Department of Labor, there are some significant tax advantages for offering retirement plans. They include:

Employer contributions: Deductible from the employer’s income

Employee contributions: Not taxed until distributed to the employee (aside from Roth contributions)

Money in the plan: Grows either tax deferred or tax free, depending on how contributions are payroll deducted (pre-tax or post tax)

Additional Incentives for Establishing a Retirement Plan

The DOL put together this great list of other reasons your small business should consider offering a retirement plan:

High contribution limits make it easy for you and your employees to save large amounts of money

For employees ages 50 and over, “catch-up” rules apply. This just means they are able to set aside additional contributions. The amount may vary depending on the type of plan

Tax credits

Small employers can claim a credit for part of the ordinary and necessary costs of starting an SEP, SIMPLE or certain types of retirement plans. Here’s how this credit works: It equals 50 percent of the cost to set up and administer the plan up to a maximum of $500 per year for each of the first three years of the plan.

Certain low and moderate income employees who make contributions to their plans may also receive a tax credit. Called a “saver’s credit,” the amount is based on the contributions participants make and their credit rate. How this credit works: The maximum contribution eligible is $2,000 and the credit rate can range between 10 to 50 percent, depending on the participant’s gross income.

Additional way to save: There’s an option for a Roth program that can be added to a 401(k) plan that allows participants to make after-tax contributions into separate accounts.

For more retirement facts and a breakdown of each plan option, read this article from the DOL here.

Mandatory Plans

Don’t forget: If your small business operates in California or Illinois, you are required to offer a retirement plan to employees. According to, New Jersey is encouraging employee participation in retirement plans by establishing a state-run marketplace for small businesses to set up retirement accounts. You can read the full details here.

We can help! We’re proud to introduce our EZ IRA option that will provide you with an affordable option that allows an employee to fund either a pre-tax or Roth IRA without the administrative cost or required employer match.

Questions? Feel free to reach out to us. Give us a call at 484-323-1404 or email

Please note that this is not all inclusive. Our guidance is designed only to give general information on the issues actually covered. It is not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.  Consult your own legal advisor regarding specific application of the information to your own plan.