When it comes to sponsoring a retirement plan, employers might feel like they’re stepping into a candy store. Each plan comes with its own flavor, texture, and benefits that cater to different tastes. Let’s unbox this sugary world and find out how some of these sweet retirement plan options compare to your favorite candies!
401(k) Plans – The Classic Chocolate Bar
A 401(k) is the go-to retirement plan for many companies, and for good reason. It’s dependable, versatile, and widely available, just like a classic chocolate bar. You can dress it up with matching contributions or other specific customized features (think of these as toffee or nuts) or keep it simple and straightforward. Either way, everyone loves this staple.
Safe Harbor Plans – The Caramel Drizzle
A safe harbor plan is like the caramel drizzle on a chocolate bar. Sure, the chocolate bar (your 401(k) plan) is satisfying on its own, but the caramel drizzle (safe harbor plan) adds that extra sweetness that makes it even better. Just as the caramel ensures everyone enjoys a consistent, delightful experience, a safe harbor plan ensures your 401(k) remains compliant, while avoiding nondiscrimination tests, and keeps employees happy with immediate vesting and generous contributions. It’s the little addition that makes a big difference!
403(b) Plans – The Gummy Bears
Designed for nonprofit organizations, schools, religious institutions, and healthcare workers, 403(b) plans are flexible in that they don’t have the same testing requirements as their 401(k) cousin, and colorful, much like gummy bears. They offer bite-sized benefits, like tax-deferred savings, and are both supportive and sweet!
Cash Balance Plans – The Peanut Butter Cup
Cash balance plans are peanut butter cups! Why? Because they give plan sponsors the best of both worlds! Cash balance plans combine the larger savings potential of a traditional pension with the flexibility of a profit sharing plan. Plus, just like the perfect candy pairing, these plans offer a satisfying mix of benefits: increased retirement savings and deliciously sweet tax advantages.
Nonqualified Plans – The Truffle Box
Nonqualified plans are reserved for key executives or highly compensated employees, making them just as luxurious as an artisanal truffle box. These plans offer employers the option of “golden handcuffs” and are a bit more exclusive. Think of them as the “boujee” retirement candy.
Prevailing Wage Plans – The Payday Bar
If your business works on government contracts, prevailing wage plans help you comply with wage requirements while providing additional benefits. These are the Payday bars of plans; they’re practical, efficient, and pack a nutty punch in the form of payroll cost savings.
MEPs (Multiple Employer Plans) / PEPs (Pooled Employer Plans) – The Variety Pack
MEPs/PEPs bring multiple unrelated employers together under one retirement plan, making them the ultimate variety pack. They bundle administrative simplicity and the joy of shared responsibility, but with less ability for customization (think prepackaged variety packs, where you can’t choose how many Snickers vs. Milky Way you get).
Sponsoring a Retirement Plan: A Sweet Deal for Everyone
Choosing the right retirement plan is like picking candy off the shelf; it requires a clear understanding of the flavors and textures that best suit an employers’ needs. From the classic simplicity of a 401(k) to the delicious potential of a cash balance plan, there’s something for everyone in this candy store of retirement options.
Not sure where to start? Don’t get stuck with decision fatigue in the candy aisle! Reach out to EGPS; we can help find the perfect solution. After all, life (and work) is sweeter when the right benefits are in place. Fill out the form below and we’ll send you some plan type comparisons to get started.
