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Helping employees save money for their golden years is an admirable effort. But that’s not the only reason to consider offering different types of retirement plans. These days any extra financial benefits aside from salaries are expected by most employees.
Serious employers must have several employer retirement plan options when presenting job offers.
Of course, workers should have flexibility and be able to choose retirement plan options that benefit their lifestyle, projected earnings, and ability to save. For that reason, it’s essential to know about the various plans employers can offer on a tax-advantaged basis as part of a competitive employee benefit package.
Retirement planning is a key part of financial well-being—and offering retirement benefits has become one of the top ways businesses attract and keep great employees. In fact, according to the Society for Human Resource Management (SHRM), more than 90% of large U.S. companies now offer some kind of retirement plan. But even small and mid-sized employers are stepping up—because it’s not just about what’s required. It’s about staying competitive.
If you’re a business owner or HR manager, offering a solid retirement plan can:
Increase employee satisfaction
Improve retention and loyalty
Help employees retire with confidence
Provide your business with tax advantages
This blog will break down the different types of retirement plans you can offer to employees. Whether you run a small business or a growing company, you’ll learn what each plan offers, how they work, and how Taylor Benefits Insurance can help you choose the best option for your team.
Before offering a specific retirement plan, it’s important to know how it works. First, an employer-sponsored plan can vary a lot in terms of features, benefits, and contribution percentages.
Some plans involve joint contributions from the employer and employee, while others are only supported by the employee.
In many joint contributions, employers match the amount employees set aside for retirement.
However, this can be costly in some situations. That’s why employers often commit to making contributions at a specific percentage. For example, a 3% contribution is not at all uncommon in many industries.
But what happens if an employee decides to set aside even more of their paycheck for retirement, say 5% or 6%? In that case, the employer is unlikely to match the entire contribution but still match the amount adding up to 3%, which is still helpful for the employee.
Granted, contributions, maximum allowed savings, and taxation will differ depending on the specific type of plan.
Offering retirement benefits is more than a “nice-to-have”—it’s become a must-have for businesses trying to stay competitive in hiring. Surveys show that employees rank retirement plans as the second most important benefit after health insurance.
Here’s why these plans matter:
Retention: Employees are more likely to stay at jobs with long-term financial security.
Attraction: Retirement plans attract skilled professionals who are thinking beyond their paycheck.
Tax Benefits: Employer contributions may be tax-deductible.
Financial Wellness: Helping employees plan for the future reduces stress and improves productivity.
Now let’s explore the main types of retirement plans you can offer your team.
The 401(k) plan is arguably the most popular of all employee retirement plans. Here’s what makes it an attractive option.
It’s the least expensive for employers. The highest cost for any retirement plan, as far as employers are concerned, comes from contributions.
In a 401(k) plan, however, employees are responsible for most of the contribution. This is usually done via salary reductions, meaning diverting a percentage of the salary directly into the plan instead of getting it in cash at the end of each month.
Salary deferrals are a great way to reduce the overall income tax because they aren’t subject to tax until taken out of the 401(k) plan.
Furthermore, the contributions made to a 401(k) retirement plan are flexible. Employees can choose to divert more or less depending on their financial situation and needs.
It’s also possible to have more control over the investment decisions to ensure employees get the best return on their money. Although it’s prudent to leave the money untouched until retiring, 401(k) funds can be accessed with limited or no penalties through hardship withdrawals or via loans, in special circumstances.
Both 403(b) and 457 plans are similar to 401(k)s. For example, both plans enable employees to defer part of their salary to their savings accounts.
But they aren’t always held to the same standards, nor can they be offered to every employee.
The 403(b) retirement plan only applies to public school employees and various organizations with tax-exempt status.
A 457 plan isn’t considered qualified. Therefore, it has different reporting guidelines and contribution restrictions. To some, it may be a better option than a 401(k).
Yet only government employees and non-profit organization employees can receive the 457 plan option from their employers.
The SIMPLE (Savings Incentive Match Plan for Employees) IRA is designed for businesses with 100 or fewer employees. It’s easier and more affordable to manage than a 401(k), making it a popular choice for small businesses.
Key Features:
Employees can contribute up to $16,000 in 2025 (or $19,500 if over 50).
Employers are required to either:
Match employee contributions up to 3%, or
Contribute 2% of each employee’s salary, even if the employee doesn’t contribute.
Less paperwork and no IRS reporting required for employers.
Why It’s a Good Option:
Simple to set up and manage.
No annual IRS filings.
Gives employees a solid path to save for retirement.
A SIMPLE IRA offers a balance of structure and flexibility for smaller employers who want to support their team’s future.
A cash balance plan is a mix of a traditional pension and a 401(k). It’s a defined benefit plan that shows employees a hypothetical account balance that grows annually.
Key Features:
Employer makes contributions and guarantees a return.
Employees see a “cash balance” that grows yearly.
Suitable for companies with steady cash flow and owners looking for large retirement contributions.
Benefits for Employers:
Higher tax-deductible contribution limits.
Great for older, high-income business owners who want to save aggressively.
Can be combined with a 401(k) for maximum benefit.
Cash balance plans are more complex but are a smart option for professional firms or established businesses seeking tax advantages.
Giving employees stock in the company they work for is another way to help someone save for retirement. ESOP benefit plans have been linked to high productivity and better retention rates, which particularly benefits companies with a solid performance on the stock market.
An ESOP is one of the most different retirement plan options because it can also serve as the owner’s exit strategy or a financing tool.
Typically, employers create an ESOP trust. Contributions made to the trust can be used to buy company shares at a fair market value. Those shares get distributed based on the relative pay of each employee.
If the company is listed, employees can hold on to their shares after they leave the company, sell them back to the company, or sell them to other investors.
This gives employees added incentive to ensure the company meets its financial goals. The more successful the company, the more the shares go up in value, and the higher the return on the employee’s retirement plan.
That said, setting up ESOP plans isn’t always a good fit for the company or its employees. First, it’s worth considering the company’s profitability. Without proven stability or continuous growth, issuing new shares or selling shares to employees at market value might not be a good idea.
Secondly, avoiding doing this in a company with a high debt to equity ratio is important. Lastly, all company owners must be willing to dilute their own shares when offering this type of plan.
The setup is also more complex than creating other retirement plan options.
Usually, companies must conduct feasibility studies, get complex business valuations, figure out their funding options, and create a smooth process for contributions and share distribution. It can be a massive administrative and financial undertaking.
But companies like Adobe, WinCo Foods, Publix Super Markets, Amsted Industries, and others have successfully implemented ESOPs as retirement plans and employee benefit packages to stimulate growth, and productivity, improve retention and create succession strategies.
A profit-sharing plan, or PSP, is another alternative way to reward employees and help them sustain their desired lifestyle come retirement.
A PSP involves using a retirement account in which employers can contribute performance-based financial rewards. Unlike other different types of retirement plans, PSPs usually only receive quarterly or annual contributions.
These are similar to SEPs, meaning that only employers can add money to the account.
What’s interesting about SEPs is that they can be offered as additional retirement planning support along with other retirement plans.
Furthermore, there are various PSP regulations in place to prevent discrimination against employees with low wages.
Similar to setting up ESOPs, creating a PSP requires extra attention to detail and the right set of circumstances to avoid putting unnecessary financial strain on a company or under-rewarding employees.
There are three main advantages to offering different types of retirement plans to your employees. In one way or another, these benefits revolve around employee satisfaction.
Many employees these days are aware of the dangers of not having a good retirement plan. Therefore, they expect employers to offer something more than just financial compensation in the form of a good wage.
Offering retirement plan options is a great way to meet these expectations. When these plans include matching contributions, satisfaction is greatly increased because it’s perceived as adding more value to the workplace.
Some employer retirement plan options come with vesting schedules. This is a fancy way of saying that employees must stick around longer if they want to reap the full benefits of matched contributions.
It’s a reliable tactic to ensure employees don’t join your company for a few months of matching contributions only to take off with the money and leave you hanging.
It’s easy and common for companies to introduce five-year vesting schedules. For example, a five-year vesting schedule would mean that employees unlock an additional 20% of the total matching contributions.
They would have to stay with the company for that period to get 100% of the company-contributed money. Leaving after two years would still entitle employees to the full amount they contributed, but just 40% of whatever the employer added to the account.
This is a benefit with multiple positive outcomes. The employer won’t get stiffed with too many contributions if someone leaves early.
If employees stay the full five years, they might be incentivized to stay even longer. Of course, having a low turnover rate is a great cost-management tool.
After all, it costs money to find and train new employees, and it can even slow down productivity.
For a long time, Americans have been able to live paycheck to paycheck. They’ve adapted to various circumstances.
But many admit to not being prepared enough for retirement. Yearly inflation is already bad enough, so adding inflation spikes and the possibility of recessions into the mix makes future planning even more critical.
GlassDoor, one of the leading surveyor companies on workplace-related issues, showed in 2017 that many people would’ve gladly turned down wage increases if they could opt for retirement benefits instead.
That was before the economy went through some serious hardships one after another.
That’s why today, having different retirement plan options can be an amazing incentive for convincing someone to work for you.
Even if it’s not the best plan, something is better than nothing. It shows that the company is invested in helping its employees.
When deciding which retirement plan to offer, ask yourself:
How many employees do we have?
Can we afford regular contributions?
Do we want employees to contribute too?
How much administrative work can we handle?
Are we trying to save more for ourselves (owners)?
Taylor Benefits Insurance helps businesses of all sizes answer these questions. We’ll guide you through the pros and cons of each retirement plan, design a package that fits your goals, and ensure you’re in full compliance with IRS rules.
At Taylor Benefits Insurance, we don’t just handle health plans—we help employers build complete benefit solutions, including retirement plans.
✅ Explain each retirement option in plain language
✅ Compare 401(k), SEP, SIMPLE IRAs, and more
✅ Connect you with top-rated retirement plan providers
✅ Help set up and manage plans with ease
✅ Keep you compliant with federal and state regulations
Whether you’re a 5-person shop or a 500-person firm, we’ll build a benefits plan that fits your team and your budget.
Offering a retirement plan is one of the smartest moves you can make for your team—and for your business. With many different plans to choose from, you can find one that fits your company’s size, goals, and resources.
From 401(k)s to SEP IRAs to profit-sharing plans, each option offers unique benefits. The key is choosing the one that helps your employees build their future while supporting your business today.
Ready to explore the best retirement plan for your company?
📞 Contact Taylor Benefits Insurance to build a retirement and employee benefits package that works for your business and your employees
Todd Taylor oversees most of the marketing and client administration for the agency with help of an incredible team. Todd is a seasoned benefits insurance broker with over 35 years of industry experience. As the Founder and CEO of Taylor Benefits Insurance Agency, Inc., he provides strategic consultations and high-quality support to ensure his clients’ competitive position in the market.
Todd Taylor with Taylor Benefits gives our small business the kind of personal service we need. Insurance benefits are important to our employees and Todd helps us find a balance between benefits and value. Todd responds immediately to my phone calls & e-mails. He has even gotten in touch with me on a Sunday when we were in need of coverage answers immediately. We are very pleased with the hands-on service Todd and his staff provide.”
-Ken and Linda Orvick, Orvick Management Group, Inc.
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