5 Common Retirement Plan Myths Busted: A Guide for Employers

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Retirement plans play a pivotal role in ensuring the future financial well-being of employees. However, these plans can be challenging for employers to navigate alone due to a myriad of myths and misconceptions clouding the landscape. 

Our retirement plan pros debunk the most common myths surrounding retirement plans below and provide valuable insights for employers to optimize their offerings. 

1) "One-Size-Fits-All’" Approach: One prevalent misconception is that there is a universal retirement plan solution that suits all companies. Each organization has unique needs, demographics and financial considerations, so be sure to work with a plan service provider that can offer tailored solutions aligned with your workforce's characteristics, such as age, income levels and employee preferences. 

2) Only Large Corporations Can Offer Them: Some employers may think providing retirement plans is only feasible for large corporations with extensive resources, which is certainly untrue. Retirement plans can be structured to fit the budget and needs of businesses of all sizes. Additionally, there are many affordable options and tax incentives available to encourage smaller companies to offer competitive retirement benefits, helping attract and retain top talent. Some new provisions introduced through the Setting Every Community Up for Retirement Enhancement (SECURE) Acts for small businesses include:  

  • An increased minimum tax credit from $500 to $5,000 to set up and maintain employee retirement plans. 
  • Businesses with up to 50 employees can receive a tax credit of up to 100% of plan startup costs up to $16,500 for the first three years. 

For additional information regarding changes to SECURE, read more here. 

3) Employees Don't Prioritize Retirement Benefits: Contrary to this belief, studies consistently show retirement plans are highly valued by employees, especially now that part-time workers may also qualify for eligibility. For plan years beginning in 2025, the eligibility period for long-term, part-time employees is shortened to two consecutive 12-month periods, down from the original three consecutive periods. Employees are increasingly viewing retirement benefits as a crucial aspect of their overall compensation package, so a robust retirement plan offering can help bring you a more competitive advantage.  

4) Employees are Responsible for Their Own Retirement Savings: Some employers believe employees should bear the sole responsibility of saving for retirement. However, employers can play a crucial role in their employees’ retirement plans by educating them about the importance of saving for retirement and providing tools to help them make informed decisions. In addition, offering a retirement plan can help in the recruitment and retention of high-performing employees.  

5) 401(k) Plans are too Complex: A common misconception among employers is that providing a 401(k) plan can be complex. While managing retirement plans involves compliance with regulations and administrative responsibilities, various service providers and tools are available to simplify the process, like our retirement plan administrators at Doeren Mayhew. Employers can leverage technology and outsourcing options to streamline plan administration, making it more accessible and manageable for their plan participants as well. 

Navigating retirement plans can be a daunting task for employers, but it doesn’t have to be. There are several retirement plan options that can be tailored to an employer’s needs and capabilities. Our retirement plan administrators can help design a plan that benefits employees, enhances overall employee satisfaction, meets your regulatory compliance needs and more. As dedicated third-party administrators, we ease the process of managing your plan and keep it on schedule for your employees. 

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