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Friday, 27 March 2020 17:41

SCRS, Virginia Asset Management Explain How to Offer a Retirement Plan to Attract and Retain Quality Employees

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 Scott Broaddus of Virginia Asset Management explained how shops that currently don’t offer retirement savings to employees can open a new 401(k) plan. Scott Broaddus of Virginia Asset Management explained how shops that currently don’t offer retirement savings to employees can open a new 401(k) plan.

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Attendees of the March 17 installment of SCRS's webinar series on its multiple employer plan (MEP) for retirement savings learned how to establish a retirement plan at their own shops---and why they should.

SCRS Executive Director Aaron Schulenburg reminded attendees the association is offering free retirement savings plan consultations to collision repair industry businesses, in partnership with Virginia Asset Management.

 

The MEP was launched in April 2019.

 

“The program’s designed to provide our members with access to cost-effective retirement plans that reduce your costs, minimize your administrative burdens and limit your fiduciary risks," Schulenburg said. "It’s also intended to help increase what our members are able to offer to attract and retain employees.”

 

Schulenburg then introduced Scott Broaddus, partner at Virginia Asset Management, certified financial planner practitioner and accredited investment fiduciary.

 

“Retirement savings is challenging for small business owners," Broaddus said. "Of the 57 million Americans who have no access to a retirement plan through their employers, more than half work in a small business.

 

"The two most common concerns are high cost and complexity," he said. "Adding a retirement plan often doesn’t feel like an urgent need.”

 

In fact, fewer than 20% of companies with fewer than 50 employees offer retirement plans, according to Broaddus.

 

Unfortunately, employees rely heavily on employers to help them save for retirement.

 

When workers over 30 years old with access to a work retirement plan were questioned, 89% said they would not have saved without it.

 

An AARP study indicated employees are 15 times more likely to save for retirement if employers offer a plan, and less than 10% of employees without access to a work plan save for retirement on their own.

 

“You should be doing anything you can do to promote employees saving and starting a retirement plan,” Broaddus stressed.

 

As of January, more than 30 states have passed or are working on legislation requiring small businesses to offer basic retirement savings programs.

 

If employers don’t offer a retirement savings, employees are automatically opted into the state plan, but “it does not give an employee a lot of flexibility about where and how they save,” Broaddus explained, suggesting it’s better to control the narrative about this current or imminent legal requirement and be able to choose the features that resonate most with employees.

 

Broaddus reiterated the information he shared in last month’s webinar: the SECURE Act increases the current flat $500 tax credit for employers establishing their first retirement plan up to $250 per non-HCE employee, up to a total of $5,000, applicable for the first three years of the plan.

 

Small employers who add automatic enrollment to their plans may be eligible for an additional $500 tax credit per year up to three years.


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