Part 2: Transitioning to a 401(k)—How and Why It Benefits Your Business
In Part 1, we covered the basics of state-required retirement plans and their limitations. While these state programs are a step forward for businesses that don’t offer retirement plans, they fall short of giving employees the robust savings options they deserve. Now, let’s dive into why transitioning to a 401(k) plan can benefit both your business and your employees—and how Maxus Plan Solutions can guide you through the process.
Why Transitioning to a 401(k) Plan Matters
As a business owner, you want to stay compliant with regulations, but you also want to offer benefits that truly support your team. A customized 401(k) offers advantages that state-mandated IRAs can’t match. Here’s why making the switch is a game-changer:
1. Attract and Retain Top Talent
In today’s competitive job market, employees want more than just a paycheck—they want security for their future. Offering a 401(k) with benefits like employer matching makes your business more attractive to top talent. Since state-mandated plans don’t allow for employer matching, your benefits package can stand out with a well-structured 401(k).
2. Greater Flexibility and Control
Unlike state-required plans that offer little customization, a 401(k) through Maxus Plan Solutions gives you full control. You can design a plan that fits your business’s unique needs, such as profit-sharing, vesting schedules, and automatic contribution escalation. You’re not just complying with a mandate—you’re shaping your employees’ retirement future.
3. Higher Contribution Limits for Faster Growth
One major limitation of state-required plans is the low contribution cap. State-run IRAs limit contributions to $6,500 per year (or $7,500 for those 50+), which restricts employees’ savings potential. By contrast, 401(k) plans allow contributions of up to $22,500 per year (plus an additional $7,500 for catch-up contributions for those 50+). With a 401(k), your employees can save more in less time.
4. Better Investment Options
State-run plans offer limited investment choices, while a 401(k) offers a broader range of options, including mutual funds, ETFs, and other investment vehicles. This flexibility allows employees to build a diversified portfolio that aligns with their financial goals.
5. Ease of Administration
One concern for businesses is the perceived complexity of managing a 401(k), but with Maxus Plan Solutions, we handle all the administrative tasks. From compliance and IRS filings to employee education, we make offering a 401(k) simple and hassle-free.
How to Transition to a 401(k) Plan
Ready to make the switch? Here’s how Maxus Plan Solutions can help:
- Review Your Current Setup: Whether you’re currently enrolled in a state-run program or offering no plan at all, we’ll help assess your business’s needs.
- Design Your 401(k): We’ll work with you to customize a plan that aligns with your business goals, budget, and workforce.
- Ensure Compliance: Transitioning to a 401(k) plan involves navigating regulations, and we’ll ensure you meet all federal and state requirements.
- Educate Your Employees: We provide resources to help your employees understand the value of the 401(k) plan and how to make the most of it.
- Ongoing Support: Once your plan is up and running, Maxus Plan Solutions provides ongoing management, including compliance updates and employee communications.
The Time to Upgrade Is Now
State-required retirement plans are a good starting point, but for business owners who want to provide the best for their employees, a 401(k) offers so much more. From higher contribution limits to better investment options, transitioning to a 401(k) can elevate your benefits package, boost employee morale, and set your business up for long-term success.
Ready to Make the Switch?
Contact Maxus Plan Solutions today for a consultation and start building a better future for your business and your employees