Implementing a 401(k) Safe Harbor plan can be a strategic move for businesses, offering benefits that go beyond providing retirement savings options for employees. Attracting top talent requires a strong employee value proposition (EVP) and a company culture that matches your desired brand. It’s a process that takes time, but a strong EVP can attract and retain top-performing employees. Ambitious candidates are driven by opportunities to grow and learn more skills. They want to work for innovative companies that focus on building a strong workplace culture.
Attract Top Talent With a 401k Plan
Offering top-tier benefits in a competitive job market can set your business apart. 401(k) plans provide valuable retirement savings incentives for employees and are an effective tool for attracting the best talent.
Traditional 401(k) plans require companies to undergo annual nondiscrimination testing by the IRS to ensure that highly compensated employees (HCEs) do not receive more favorable treatment than rank-and-file employees. This can burden small businesses, especially as they strive to promote retirement savings among all employees.
A Safe Harbor 401(k) plan can help businesses eliminate this testing burden. These plans are an excellent option for small businesses because they allow owners to contribute a higher percentage of their income into their 401(k), which helps attract and retain high-profile employees. Safe Harbor plans also feature employer contributions that are fully vested immediately. This makes it easier for employees to move on to other employers when the time comes. This is an essential consideration for construction and real estate companies that struggle with a labor shortage.
Leverage Employee Referrals
A 401k safe harbor plan is a great way to attract talent in today’s highly competitive job market. Many construction and real estate companies are looking for creative ways to attract and retain top talent in the face of a labor shortage. Offering a robust retirement plan can be as impactful as a competitive salary and health benefits in attracting and keeping top talent. Safe harbor 401(k) plans can help encourage employee retirement savings by requiring company contributions through matching or non-elective contributions. Additionally, these plans provide a tax credit to small employers that establish them.
Furthermore, leveraging employee referrals can complement the appeal of a 401(k) safe harbor plan, as satisfied employees are likely to recommend your company to their professional networks, expanding the pool of potential candidates. This dual approach enhances talent acquisition and underscores a comprehensive commitment to employee well-being and financial security, making your business an even more attractive and competitive construction and real estate employer.
Enhance Your Employee Value Proposition
A robust retirement plan can be an essential incentive to attract and retain the best employees in a competitive job market. A 401k allows your employees to save for their future and can help them get out of debt in retirement. This is why many small businesses offer a 401k plan for their employees. However, not all companies can afford to put a lot of money into their retirement plan yearly. In addition, if a company fails compliance testing due to top-heavy contributions by owners and highly compensated employees, they may have to refund those contributions or even close their plan altogether.
Fortunately, there are ways for your business to keep its 401k plan and still pass the nondiscrimination tests. One option is to adopt a safe harbor plan, which bypasses annual testing requirements and maximizes tax benefits for the company and its highly compensated employees. This helps your business avoid the headaches of compliance testing and gives you more flexibility in attracting and retaining top talent. In addition, a safe harbor plan makes it easier for your employees to participate in the plan and increase their savings.
Create a Strong Workplace Culture
Providing top-notch benefits is one of the most important ways to differentiate your business from other employers in recruiting and retaining talent. The 401(k) retirement plan is an integral part of this, and a safe harbor 401(k) design has become a favorite of many small businesses. Safe Harbor 401(k) plans allow you to legally bypass expensive plan testing, optimize tax benefits, and open the door for higher profit-sharing contributions for owners and highly compensated employees. ShareBuilder 401k is the premier Safe Harbor 401(k) plan provider and can help you create a high-performing workplace culture that attracts and retains top-notch talent.
Give Your Employees the Tools They Need
Finding and retaining the best employees can be challenging, especially in today’s tight labor market. Offering a retirement plan is more than just another employee benefit; it’s an opportunity for businesses to incentivize their valued workforce and provide them with tools to secure a solid financial future. A safe harbor 401(k) plan is an excellent choice for small businesses looking to prioritize retention. It allows companies to legally bypass expensive compliance testing while opening the doors for more significant contributions for owners and highly compensated employees. If you’re ready to attract top talent and elevate your business with a safe harbor 401(k) retirement plan, speak with one of the retirement specialists to discuss your options.