Small businesses can start retirement plans to attract and retain quality employees. A 401k plan allows employees to save pre-tax dollars for retirement while also providing tax benefits to the business. Setting up a 401k is simple, requiring only basic decisions around employer matching contributions and investment options. Paychex makes starting and managing a 401k easy and affordable for small businesses.

1. Small Business Retirement PlansUpdated 07/29/2008

2. Why Start a Retirement Program?RETIREMENT

3. TAX- SAVINGS

4. CANNOT PREDICT FUTURE, ONLY PREPARE

5. ATTRACT BETTER QUALITY EMPLOYEES

6. RETAIN CURRENT EMPLOYEESHow much will I get from Social Security?Read the following excerpt from the Social Security Administration’s website: “Social Security was never meant to be the sole source of income in retirement.”A comfortable retirement is based on a “three-legged” stool of Social Security, company-sponsored retirement plans and personal savings.

7. Tax Savings There are two forms of tax savings:ANNUAL ONGOING UNTIL RETIREMENT Annually, the typical Paychex owner will save 30%-40% on every dollar put into a retirement plan. While this is important, the true POWER of a 401k plan is the Tax-Deferred (or Tax-Free through Roth Provision) growth the tax law allows. Outside of Post-Tax Annuities, no other vehicle allows your savings to grow without being taxed on a yearly basis. This power allows retirement dollars to grow at an incredible rate with time.

8. Pre-Tax Growth vs Post-Tax Growth*Assuming 25% tax rate, 10% rate of return, compounded only monthly

9. So you don’t want to take advantage of I.R.S. section 401?Questions to consider if you don’t want a forced savings plan: Will You have the discipline to save EVERY month?

10. Will You take the time to make good investment decisions?

11. Will Your investment returns even keep pace with inflation?*Assuming 25% tax rate, 10% rate of return, compounded only monthly

12. Cannot Predict Future, can only Prepare for itIn addition to the battle against inflation as you can see in the chart on the right, retirees are living longer and longer. Recent studies have shown that a typical retiree can expect to live 20+ years. Therefore, one must acquire a large nest egg.

13. Cannot Predict Future, can only Prepare for itHow Big of a Nest Egg?According to current life-expectancy figures, you could live 20 to 30 years after you retire at 65. To make sure your savings last as long as you do, experts say, you can’t afford to withdraw more than 4% to 5% from your nest egg each year, adjusted annually for the rise in the cost of living. (Of course, you’ll also receive some income from Social Security.) Here’s how big a personal nest egg you’ll need at retirement, depending on the annual withdrawals you plan to take.

14. Attract Top EmployeesStudies show that without benefits, outside of acquaintance or luck, a business owner cannot attract the best quality EMPLOYEES.Research shows small businesses need retirement benefits*While some research shows that small business retirement plans are too expensive for their potential customers, a new survey underscores the fact that employers might want to reconsider that notion. By Editorial Staff While some research shows that owners think small business retirement plans are too expensive, a new survey underscores the fact that employers might want to reconsider that notion. Fidelity finds that 49% of workers with a retirement plan say the would not take a job with a company that doesn't offer one. 68% percent of employees said that a retirement plan is critical or very important. Just 36% of employers said it was critical or very important to their staff recruitment and retention efforts. *© 2007 Employee Benefit News and SourceMedia, Inc.

15. Retention of Current EmployeesIf you’re not offering a retirement plan to your employees, don’t be surprised to lose them to a competitor that does!Misconceptions about 401(k)s could cost Small Business OwnersBy Lynn Gresham Forty percent of workers in small companies say they would leave their job for one that provided a 401(k) plan, according to a survey conducted by Harris Interactive and sponsored by ShareBuilder 401(k), a subsidiary of ING Direct. . . .

16. Retention of Current EmployeesOnly 3 ways an owner can retain their employees:1) $$$$ - Pay so much money that an employee cannot afford to leave.2) ENVIRONMENT - Make the environment so great that employee doesn’t want to leave even though they can make more money elsewhere.3) LOW-COST BENEFITS - For the cost of one half (1/2) of a person for health insurance, you can offer a retirement plan to your whole company.

17. OK, so I think I need a PlanQuestions we will now answer:How do I get money in a plan?How much can I get in?What are the 3 things I need to know to start a plan today?How much is this going to cost me?Will the government help pay for my plan?

18. How Do You Get Money In?

19. How Can You Maximize Your 401(k)?Matching0% to 4%Profit Sharing0% to 25%Automatic Per Pay Period Contribution $16,500 Salary Deferral(1%-96% of Pay)+ $5,500 Catch up Contribution for those Age 50 and overEmployeeFundedNew Comparability,Age WeightedOptional Employer ContributionsCombinedAnnual Maximum up to$$ 49,000 $$

20. Your 401(k) plan, easy as 1-2-33 Simple Decision to Start a Plan TodayOptional Company Match

21. Vesting schedule

22. Multiple Investment OptionsNon-Broker Investment OptionsSchwab Instl Select S&P 500Pioneer Global High YieldDelaware Corporate BondVanguard Inflation-Protected SecsAmerican Century Target Maturity 2025Federated Automated Cash Management TrustFA OverseasFA Dividend GrowthFA Equity GrowthFA Growth OpportunitiesFA Mid Cap IIFA Small CapFA BalancedFA Government IncomeFA Intermediate BondFA Strategic IncomeFA Money Market – Prime FundColumbia Acorn InternationalQuant Foreign ValueSSgA International StockQuant Emerging MarketsVanguard Small Cap Value IndexKeeley Small Cap ValueColumbia Mid Cap ValueDelaware American ServicesYacktmanColumbia Marsico 21st CenturyJanus ContrarianFA Freedom Funds 2010FA Freedom Funds 2015FA Freedom Funds 2020FA Freedom Funds 2025FA Freedom Funds 2030FA Freedom Funds 2035FA Freedom Funds 2040FA Freedom Funds 2045FA Freedom Funds 2050$125 per month$180 per monthEach offer multiple investment choices

23. No front-end or back-end sales charges