Managing retirement benefits for your employees is a big responsibility. Still, it can also be a great way to attract and keep top talent, and it helps your team build a secure financial future. Here are some straightforward tips to help you manage your retirement solutions effectively and make it a win-win for everyone.
Know your responsibilities
As an employer, you have a fiduciary duty to act in your employees’ best interests. This means you must manage the plan with care, skill, and diligence, ensuring retirement funds are managed prudently and ethically. Failure to do so can result in paying interest on late deposits, penalties, or having your plan disqualified.
Pick the right solution
There are many retirement solutions to choose from, and it’s crucial to select one that aligns with your business goals. Some plans require employer contributions, while others do not. Similarly, some allow for employee contributions, and others do not.
The most common retirement benefit plans are Traditional 401(k) and Simple IRA plans, but there are other options as well. As an employer, you need to understand the differences and choose the best plan that fits your needs. For a detailed comparison, check out the Department of Labor’s guide.
Review regularly
Even after selecting a retirement solution, it’s essential to review it regularly. Make sure the plan’s fees remain reasonable, and stay on top of any regulatory changes. Regular reviews help ensure that the plan continues to meet both your needs and those of your employees.
Encourage employee participation
Engaging your employees in their retirement benefits is crucial. Here are some strategies to boost participation:
- Clear Communication – Use simple, clear language in all your plan materials.
- Online Tools – Provide online resources to help employees make informed choices.
- Automatic Enrollment – Enroll employees automatically, letting them opt out if they choose.
- Employer Match – Offer matching contributions to motivate employees to join.
- Regular Reminders – Send out reminders about the plan’s benefits and the importance of saving for retirement.
Get professional help
A professional advisor can assist you with choosing the best plan type and features, and ensure your plan follows all the rules. This expert guidance can help you make the most of your retirement plan and keep everything running smoothly.
Accounting for retirement benefits
Accounting for retirement benefits involves recording the employer’s portion as an expense and tracking employee contributions for proper submission. For plans with automatic administration, contributions are often handled alongside payroll. Otherwise, employers must manually make contributions.
For manual contributions, create payable accounts for each benefit type. Record contributions in these accounts during payroll, and reduce the balance when payments are made. This method ensures accurate tracking and confirms that all contributions are correctly paid.
Managing retirement benefits doesn’t have to be overwhelming. By staying on top of your responsibilities, regularly reviewing your plan, and educating your employees, you can create a strong and beneficial retirement plan. This not only helps your employees but also makes your business more attractive to current and future talent.
At Beyond, we assist clients by verifying that all employee benefits are recorded accurately in their accounting. This gives our clients peace of mind that they are handling their retirement benefits properly. If you want to explore working with us, please contact us here.
Portions of this article were written using OpenAI. (2024). ChatGPT [Large language model]. https://chatgpt.com/c/391e5a40-3655-4786-b859-399cd691d2ca