Reduce Employee Turnover Rate with a 401k Plan

Will a 401k really help me reduce employee turnover and attract new employees? Does this result in cost savings for my business? Jean W. Jourdan, Syracuse, NY runs a glassware store.

Yes, you can definitely bring down your store’s employee turnover by offering an attractive qualified retirement benefit plan like a 401k. These plans make it easy for the employee to save for the future and bring some special benefits for them too. The tax advantages your employees will enjoy with these plans make them especially attractive.

Businesses that offer 401k plans are viewed as good employers by potential employees. Such plans show that the employer is concerned about the welfare of his staff. An employer contribution makes a 401k plan even better because, for the employee, it is essentially ‘free money’. For you, the employer, a contribution match is a great way to encourage participation from your employees’ side. Remember that your contributions give you tax benefits too. Clearly, if your business has a 401k plan for employees you can attract the best talent in the market and retain existing employees quite easily.

Studies show that replacing an employee costs anywhere between 26% to 49% of his annual salary. This means that even by preventing one employee replacement your business stands to save a substantial sum of money. Set up a 401k plan for your business as the first step in reducing employee turnover. It is also important to make sure that you have the right kind of investment products on offer with your 401k plan. Your plan should be easy to operate and manage so that your employee can track his retirement savings with perfect ease. The best way to meet all these objectives is to choose a DIY software package like to set up, manage and update your business’ 401k plan.

About Elliot Earl, Director, Pension Trade Association
Director, Pension Trade Association Founded in 1982, the Pension Trade Association [California Domestic Nonprofit Corporation #C1629080] is dedicated to helping workers save for their retirement through expanded coverage of 401k -type defined contribution pension plans.

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