Types of Employee Benefits Necessary to be Competitive
New business owners ask: What are the four major types of employee benefits? In this market, businesses have decided that base employee benefits are now part of the standard for payroll.
Administrative support services can be so busy with trying to adjust payroll that they fail to to employee benefit requirements. This is a huge problem when entry into certain employee benefit programs is time-sensitive.
There needs to be a good balance of pay versus benefits. It is a really good idea to ask employees whether they want more pay or more benefits. By doing that, your employees will feel more in charge of their working destiny.
Here is a small list of employee benefits that are competitive:
- 401(k) Retirement Plan (Major Type)
- Company Credit Card Plan
- Company Credit Union
- Health/Dental Insurance (Major Type)
- Life Insurance (Major Type)
- Paid Vacations
- Paid Sick Days
- Flexible Scheduling
- Drug & Alcohol Rehab
- Disability Insurance (Major Type)
- Education & Six Sigma Training
The more benefits your company can feasibly offer the better. Besides employee benefits, there are lots of substantial employee perks that cost nothing or very little.
401(k) and other Retirement Programs
Retirement programs are the standards for large corporations. Smaller businesses find that doing 401(k) matching can be stressful for their company. That is why capping the amount that your company will match is important.
Here are common employee benefits 401(k):
- 401(k) Quit/Death Accounts
- Roth IRA
- Rollover IRA
- Safe Harbor
- Matching Contributions
The goal of this program is to encourage employees to give to their maximum amount that you match. It is good to hand out literature as to the benefits of the retirement programs.
Do not be upset if employees opt out of this program – no matter how valuable you think it is.
What Happens to 401k when you Quit?
Employees leave a job for a lot of reasons. People want to know what to do with their 401k after they leave a job. They think they need to transfer it like their other insurance programs.
Here are the choices after severance:
Employees can do nothing at all. Because this is an easy option, a lot of employees just keep the 401k as is.
Employees can more assets over into a plan offered by their new employer. This can be messy in the middle of a down-turned market.
The least favored method is to cash out and use this money for living expenses in between jobs. This is a way to lose all of the momentum as well as face financial penalties.
The best option is called a Rollover IRA. Because this IRA account can travel with you from job to job, this offers the most long-term security.
Matching contributions is a way to show your value to your employee. This is an incentive to keep your employee loyal to your company – especially if you do better matching than your competitors.
It is a great idea to show people about compounding interest and how this builds up a retirement account.
What is Safe Harbor Matching Contribution?
Companies can choose to create a safe harbor plan for your employee investments.
The most popular option that employers do is a dollar-for-dollar match for 4% of employee compensation. This means that if your employee earns $100, they pitch in $4 and the employer pitches in $4.
Another option is to put in 3% for each employee whether or not they choose to go with this program. Sometimes, just having the employee funds on hand is good for your business bottom line.
The Types of Employee Benefits that Matter
Employees have a hard time covering insurance without the help of a group plan through an employer. Medical, disability, retirement and life insurance is the base employee benefits that your business should offer.
It is a good idea to get the most competitive benefits for your employees to be the best for them and not your business. In order to be a true benefit, it should be better than your closest competitor.
Speaking of benefits, having an efficient time clock system that reduces both employee and management stress is important. Time Clock Wizard is an online time clock app that makes it easy for employees to check their schedule, switch shifts and request time off.
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