While qualified retirement plans provide employers both financial and business benefits, they also provide employees a way to save for retirement. Though most of the financial professional's attention is going to focus on the businessowner's needs, it's important to understand the benefits enjoyed by employees through a retirement plan. They include:
- A Key to Retirement Income Security
— Many Americans understand that financial security in retirement cannot rely solely on Social Security. Retirement income security has long been illustrated as a three-legged stool, each representing a source of retirement income — personal savings, employer retirement plans, and Social Security.
- Tax Savings
— Employees realize the same tax benefits with their contributions as do employers. Namely:
- Employee contributions reduce current taxable income; and
- Earnings accrue on a tax-deferred basis.
- Payroll Deduction
— The most painless way to save. Monies contributed to the employer's plan can be automatically deducted from participants' pay, therefore requiring less discipline from participants to put the money aside on their own.
