The advantages of implementing a franchise 401(k) plan

Owning a franchise comes with its fair share of challenges, one of them being finding and keeping great employees. One way to tackle this challenge is by offering a comprehensive benefits package, including a 401(k) plan.

In this article we’ll dive into the advantages of implementing a retirement offering, the value for your employees, how it impacts talent recruitment and retention, how to offset the cost with tax credits, and benefits to you as a franchise owner.

Talent recruitment and retention

In today’s job market, a strong benefits package is a necessity for attracting and retaining talent. A study done by Human Interest in 2022 showed that a 401(k) plan was listed as the second most wanted benefit, right after health insurance. Health insurance is typically seen as essential for employees and, if retirement falls right below, it could be suggested that employees now see retirement as an essential benefit as well. 

Offering a retirement plan goes beyond drawing in talent: A study conducted by Gusto showed that “workers on average were 40% less likely to leave in the first year if they are offered a retirement benefit” and it’s highest for industries like Retail and Food & Beverage. When you offer a 401(k) it’s showing your employees that you are interested in their financial well-being for the long term. 

Tax advantages

One of the biggest reasons to consider offering a retirement plan is that there are substantial tax advantages under SECURE Act 2.0 that make it more affordable to start and maintain a 401(k) plan.

Companies with up to 50 employees can get a tax credit of up to $15,000, which can offset the initial financial barrier to setting up a 401(k) plan. Businesses with 51 to 100 employees continue to benefit from the original tax credits, covering 50% of administrative costs up to $5,000 annually for three years.

An additional tax advantage as a business offering a 401(K) can come from matching employee contributions. Any amount a business contributes to their employees’ 401(k) plan can be deducted from the company's taxable income - lowering overall tax liability. Employers with less than 100 employees can have a tax credit of $1,000 for the first five years based upon employer contribution to participants who make less than $100,000 - this is phased out over the years and the number of employees.

Be prepared for your own retirement 

As a franchise owner, contributing to your company's 401(k) is also a strategic move for your financial future. You’ll get the same tax-deferred growth on investments which means the money you invest grows without being taxed until withdrawal, which could help you save a significant amount over the years in preparation for your own retirement.  

Administering a plan is easier now than ever

Gone are the days when administering a 401(k) plan meant endless manual tasks. With Human Interest, you can embrace a modern, user-friendly solution. Seamlessly integrating with over 500 payroll providers, we eliminate the tedious manual work typically associated with managing a plan so you can focus on running your franchise.

If you’re interested in learning more about the benefits of offering a 401(k) as a franchise and how to get started, you can book time with a retirement specialist here.

Human Interest Inc. is an affordable, full-service 401(k) and 403(b) provider that seeks to make it easy for small and medium-sized businesses to assist their employees with investing for retirement. For more information, please visit humaninterest.com.

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Human Interest
Human Interest is a modern and affordable 401(k) and 403(b) solution for small and medium-sized businesses. Our mission is to ensure people in all lines of work have access to retirement benefits. Learn More