By Lee Allphin, Employer Advantage Founder and Chairman of the Board
A Brief History of Retirement Plans
In 1875, The American Express Co. created the first private pension plan in the U.S. for the elderly and workers with disabilities. By 1926 approximately 200 private pensions were in place for larger employers. These were “defined benefit plans.” Early pension benefits from large companies were designed to pay out a relatively low percentage of the employee’s pay at retirement. However, small to medium-size employers had no retirement benefits until Social Security was introduced over 80 years ago.
Why Retirement Plans Matter Today
Companies that provide retirement benefits have a distinct advantage in hiring and retaining employees. Historically low unemployment levels have made it difficult for companies to attract and keep top talent without strong benefits. For employees, a strong retirement plan is a way to ensure a strong income during retirement, especially with ever-growing fears that Social Security funds won’t be able to meet long-term financial needs.
Retirement Plans for Small Companies
Even though retirement plans have become a big deal for both the employer and employee, many businesses have been unable to provide them. The major drawback, especially for smaller businesses, is the costs of administration, required plan documents, and annual report filings. The fixed cost of just getting the plan up and running has become a deterrent in providing this mutual benefit.
One of the great features of services offered by Employer Advantage is our multiple-employer retirement plan for any-size business. We sponsor our 401(k) Plan, which means our clients have access to a discounted fee structure and a management platform normally only available to very large corporations. Our retirement savings plan allows our clients to participate without the burden of plan administration, all while saving thousands of dollars and giving employees outstanding service that maintains a happy workforce.
Good for the Employer and the Employee
The Employer Advantage multi-employer 401(k) “defined contribution plan,” takes its name from the ability for both the employee and/or the employer to contribute a fixed dollar amount to the retirement plan. Each employer has the option to contribute to the employee’s account. With a 401(k), you control how your money is invested. Most plans offer a spread of mutual funds composed of stocks, bonds, and money market investments. The most popular option tends to be target-date funds, a combination of stocks and bonds that gradually become more conservative as you reach retirement.
The Employer Advantage 401(k) retirement plan lets workers save and invest a piece of their own paycheck before income taxes are taken out. This means larger savings are possible and taxes are only paid upon withdrawal of the funds after retirement.
We are proud to be able to provide our clients with a retirement plan that will give their employees the ability to build retirement savings in addition to whatever amount they will be receiving from Social Security after retirement. For businesses that already have a retirement plan in place, we can take on the administrative burden of their current 401(k) plan.
About Employer Advantage
A New Path to HR Bliss – Trusted for more than 25 years, Employer Advantage frees you from the administrative and compliance burdens of having employees so you can focus on what you do best: helping your business succeed. From energetic entrepreneurs to large corporations, we create a tailored and strategic approach to fit your individual needs and company culture. Our suite of services includes payroll, employment taxes, health and benefits, retirement, human resources, employee manuals, safety, workers’ compensation, OSHA, DOT, and more…
More than just a slick software solution, our dedicated service teams save you time and money while providing your employees with top-notch assistance and benefits. We enhance your profitability while reducing the costs associated with employment laws and the often-significant penalties for the failure to comply with them. Learn More: www.EmployerAdvantage.com
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