While retirement might be decades away for some employees, it's never too early to start preparing for it.
Even though the onus is on the employee to do the savings, many employers take on the responsibility of giving their employees an outlet for which to do it. Employee retirement plans are set up by businesses as a way to give their workers an incentive to start saving now for their senior years. The plans allow employees to set aside tax-free money for their retirement.
Employee retirement plans are offered in a variety of options, including traditional 401(k)s, Individual Retirement Accounts (IRAs), Roth 401(k)s, Safe Harbor plans, Simplified Employee Pension Plan (SEP) IRAs, and Savings Incentive Match Plan for Employees (SIMPLE) IRAs. Each of these options offers employees tax advantages in that the money they put into the accounts is tax-deferred until it is withdrawn.
"It's a tax advantage vehicle for saving for those retirement years," said Wally Miller, an employee benefits attorney with law firm Schwabe, Williamson & Wyatt.
Miller said employee retirement plans are one of the best and most useful benefits employers can offer their workers because these plans keep on giving.
"Other fringe benefits may not actually ever be utilized by an employee, such as life insurance or disability insurance, but when a retirement benefit goes into the plan, the employee knows that they will eventually be getting it somewhere down the line," Miller told Business News Daily.
When searching for an employee retirement provider, small businesses should consider several factors, including the types of plans the provider offers, the educational tools it provides both the employee and the employer, and how easy it is to access the retirement accounts after they have been set up. Additionally, many employers benefit from a retirement plan that easily integrates with their payroll solution.
To help small businesses find an employee retirement plan that best fits their needs, Business News Daily's sister site Business.com has conducted in-depth reviews. Here are some 'Best Picks' for the best employee retirement plans.
#1 ADP
ADP earned this year's top honors for its range of services, mobile app, and customer support. ADP provides retirement plans to businesses of all sizes. The company offers a wide range of plans and options, including a traditional 401(k), Roth 401(k), SIMPLE IRA, Safe Harbor 401(k), profit-sharing, and New Comparability Plans. ADP gives employees the ability to transfer existing retirement plans into their new ones. When enrolling in new plans, employees can access their account online to find out more information throughout the entire process.
Plan maintenance: ADP offers employers flexible vesting schedules and company matching contribution options. With the service's mobile app, employees can use their mobile devices to access their retirement accounts and view contribution rates, returns, loan balances, and specific information about their plan. This plan also integrates with ADP's payroll services.
Help and support: ADP representatives are available to answer questions via email, telephone, and live chat. They offer a wide range of online resources, including FAQs and videos. Employees also have access to payroll savings and 401(k) contribution calculators.
#2 Fidelity Investments
Fidelity Investments scores high marks from Business.com for providing plans for businesses of all sizes and for the retirement preparation help it provides employees. The company offers numerous retirement plan options, including IRAs, 401(k)s, profit sharing and Safe Harbor plans. Additionally, Fidelity plans feature a variety of educational tools, a mobile app and payroll integration. Employees who already have a retirement plan can easily transfer it to their new Fidelity account. Once a plan has been established, employees can keep a constant eye on it by accessing it through any Web browser.
Plan maintenance: Fidelity Investments helps employers manage their compliance testing, employee contributions and vesting schedules. This retirement plan also integrates with an employer's current payroll service to help streamline the process. Additionally, the Fidelity mobile app lets employees keep tabs on their retirement accounts from wherever they are.
Help and support: Fidelity Investments works closely with businesses to ensure they are picking the plan option that makes the most sense to both the employer and the employee. Representatives are available to answer questions via email and telephone. The company's website features a variety of resources, including an income simulator, comparison charts, news reports and FAQs.
#3 Paychex
Paychex ranks highly for its flexible retirement plans, mobile app and payroll integration capabilities. With this service, businesses can customize retirement plans to fit their specific needs. Paychex offers a variety of retirement plans, such as traditional 401(k)s, Safe Harbor plans and SIMPLE IRA plans. The service has both employee- and employer-dedicated websites. The employee information website lets participants educate themselves on the plan options and processes, while the employer website gives businesses instant access to plan investments and participant information.
Plan maintenance: Paychex can assist businesses with employer contributions, vesting, loan options and compliance testing. In order to improve efficiency, the service easily integrates with a company's current payroll solution. Additionally, the Paychex mobile app — available for iPhone and Android devices — allows employees to access retirement accounts and employee benefits from their smartphones and tablets.
Help and support: Paychex representatives can be contacted via email or telephone. The company's website features white papers, online calculators, videos and webinars.