Just thinking about starting a 401(k) plan can sound daunting to small business owners—especially during this economically challenging time. Actually, however the rewards could put the business ahead and plenty of experts can help you get started.
Rooting for Small Businesses
Thriving small businesses are integral to the recovering economy. Across the country, small business owners are working hard to make adjustments and keep their operations turning. The U.S. Chamber of Commerce offers a Coronavirus Small Business Resources Guide. Practical suggestions are provided on a variety of topics including how to:
- Negotiate with creditors
- Cut overhead
- Boost online presence
- Re-open safely
Recruit and Retain
Especially given the continuing challenges of the pandemic, employees value working for employers who demonstrate a commitment to their total well-being. Recently, for example, Business News Daily summarized the many benefits of providing employees with a 401(k) plan:
Offering a 401(k) plan increases businesses’ potential to recruit employees and keep them in the fold, as well as to see higher worker productivity and financial savings from reduced turnover. Sponsoring a 401(k) also paves the way for business owners to reduce their personal tax liability, enjoy newly available business tax credits, and boost their business tax deductions.
Many employers make matching contributions to employees’ 401(k) accounts. These contributions may qualify as ordinary business expenses, in which case they are tax deductible up to the annual corporate deduction limit on all employer contributions (25% of covered payroll). Profit-sharing contributions to employees’ 401(k) accounts are also deductible, further reducing the tax liability for small businesses.
Secure Expert Help
Small business owners do not have to go it alone to start and administer a 401(k) plan. Third party administrators can be contracted to manage operations. As Investopedia points out:
In recent years, the types of programs outsourced to third parties have expanded and now may include the processing of employee retirement plans and flexible spending accounts.
As a plan sponsor, you will want to become familiar with The Employee Retirement Income Security Act (aka ERISA) which originally became a federal law in 1974. It has since been updated several times. Simply put, the purpose of ERISA is to safeguard retirement savings from mismanagement and abuse. You are required by law to obtain an ERISA Fidelity Bond for your company’s retirement plan. A fidelity bond protects the assets in the plan from covered losses due to theft and misappropriation.
Count on expert and efficient help from Colonial Surety Company, an ERISA Fidelity Bond expert. Colonial will help you comply with regulations and further protect your plan—and yourself as a fiduciary of the plan. Colonial’s knowledgeable staff and user-friendly online services will support you through all aspects of obtaining and renewing your bond.
When you choose a Colonial package, you receive a discount on ERISA bond coverage for your plan; Fiduciary Liability coverage for yourself; and, the option to add on Cyber Liability coverage. Save time, money and stress: Get a Colonial Surety ERISA Bond Package.
Good To Know
Only companies named on the Department of Treasury’s listing of approved sureties are able to provide ERISA fidelity bonds. Colonial Surety Company is not only U.S. Treasury listed, but also rated “A Excellent” by A.M. Best Company, and, licensed in all 50 states, the District of Columbia and most U.S. Territories. At Colonial, rooting for small businesses always matters—that’s why we offer a simple digital and direct process that allows customers to instantly purchase bonds and insurance online.
Founded in 1930, Colonial Surety Company is a direct seller and writer of surety bonds and insurance products for a wide range of industries and professions. Colonial’s priority: innovating to provide value-added services to small business owners. Our comprehensive, service-based solution arms small businesses with the ERISA bond required for your 401(k) plan—plus, affordable additional protection, such as Cyber Liability coverage for the plan, and Fiduciary Liability coverage for the plan sponsor.