Your total compensation
plan must serve to attract, retain and motivate your employees. While
wages will be the largest component, other parts of the plan are also
important. Together with the work environment, your benefit program may
be the difference between having an effective, steady work force or a
group of dissatisfied employees that you are constantly replacing.
The right retirement plan should take into account the business's needs
as well as the employees concerns. Costs and ease of administration must
also be carefully evaluated. Here are very brief descriptions of several
choices. Be sure to investigate them thoroughly before deciding which
one is right for your business:
- SEP-IRA -
These plans are ideal for small organizations or self-employed individuals.
They are easy to establish and have no special governmental filing requirements.
Only the employer makes contributions and the limit is up to 25% of
compensation, up to $53,000 for 2015.
- These plans are for companies with up to 100 employees and allow for
employees to defer wages into the plan and for the company to also make
contribution. Employees can defer up to 100% of their wages with a limit
of $12,500 for 2015 and up to $15,500 if age 50 or over. The employer
can elect a matching feature or a simple percentage of wages contribution.
There is some administration needed.
- 401(k) Plans
- These plans have become popular because of the their flexibility and
the higher limits for employee and employer contributions. There can
be significant administration needed and annual filings are required.
Employee benefit consulting
firms, trust departments or some investment firms usually have the expertise
to help you evaluate your options. However, be sure to understand all
the costs for administration and investing the funds.
If your company has many employees, a group medical plan may be attractive.
Health insurance has become expensive so you will want to consider your
plan carefully, shop for the best plan and perhaps use a health insurance
consultant. Your cost will be based on the size and make-up of your group.
It will also change based on actual results. You may want to consider
sharing the cost with your employees and providing different options for
them to choose.
supplemental life insurance
Many insurance companies offer relatively inexpensive plans that can be
established so the employees share in the cost.
This type of program is relatively new and offers some tax advantages
for the employees with little or no additional costs for the employer.
Employees direct a portion of their wages into the accounts to provide
for the reimbursement of dependent care or unreimbursed medical costs.
Employees pay lower income taxes and the company will pay less in payroll
These are "use
it or lose it" arrangements. Employees decide how much to defer for
each type of expense and that decision is irrevocable. Many insurance
companies offer these types of arrangements and some will handle all the
Many employees are interested in accumulating funds and yet have a very
difficult time actually saving money on a month-to-month basis. You may
be able to help them without any cost. Most payroll services offer employees
the ability to direct a portion of their wages into an account at their
financial institution. Be sure your employees are aware of this option
and also of direct deposit. These conveniences make it easier for employees
to handle their finances and the company may save some of the costs of
Many employees are interested in furthering their education. If your business
requires ongoing training in certain fields, it may be prudent to provide
partial or total reimbursement for certain types of classes. The employees
enhance their skills and you have a better-trained employee group.
Vacation and days-off
Employees need time off occasionally for personal business or just for
rest and relaxation. Having a policy that employees understand and that
provides some flexibility will be greatly appreciated.
Employee benefits are important. Creating a program doesn't have to be
difficult or expensive. The trend is for more flexibility for employees
to choose what is important to them and for employees to share in the
total cost. While most recruiting conversations center on salary levels,
ongoing employee satisfaction is greatly influenced by what comes with