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Offering Benefits Is Key to Attracting Top Employees

Offering Benefits Is Key to Attracting Top Employees

Question: I’m just a small business. Why would I need to provide benefits to my employees?

Answer: In today’s job market, more employees place high value on benefits. Applicants no longer base the decision where to work solely on salary, but also on what else the employer offers, such as life, health, disability and retirement benefits.

Employer-sponsored plans have advantages for all parties. For employees, they can get health coverage for themselves and family members, at little or no cost. They also don’t have to worry about annual premiums, and don’t have to deal with the hassle of writing checks.

But employers gain, as well, since these plans help attract and keep valuable employees. In today’s competitive job marketplace, a good benefit plan can make the difference between hiring or losing qualified job applicants.

Benefit plans also boost employee morale and provide a sense of security, since employees know they’re covered in case of a medical emergency or if they become disabled.

Also, some plans may provide a tax deduction for the business, either immediately or when the benefits are paid out.

Remember that “qualified” plans are regulated by the Internal Revenue Service and the Department of Labor. These must be approved and comply with nondiscrimination, funding and reporting requirements.

Participating businesses can get a tax deduction, while employees are not taxed on life and health plan premiums and benefits, and can usually defer taxes on retirement plan contributions until withdrawn.

There are also “nonqualified” plans; these are more flexible and aren’t regulated as strictly. Unlike a qualified plan, the employer can pick and choose which employees to cover. That’s why nonqualified plans are often called “executive benefits.” These plans can also provide a tax deduction for the business.

You may choose a combination of the two , a broad plan covering all employees and a supplemental plan for key people. You should decide which benefits to provide, adjusting the plan to fit your needs.

The best plan is one that meets your objectives , for your employees, your business and you. A financial planner can work with you to find the plan that works best for you.

Answered by Alicia Weedman, CPA, of Lanning and Weedman, and treasurer of the local chapter of the National Association of Women Business Owners.

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