Mutually beneficial: offering the best benefits to employees also helps employers.

• Author: Johnson, Daniel, III
• Position: Business Guide 2014

There are many worthwhile reasons a company should offer its employees the best benefits that it can afford. While some of these reasons are obvious, business owners are often not aware that a well-rounded benefits package can also be very beneficial to the company's bottom line.

There have been many big changes in the last two years that affect the benefits provided by most employers. One of the most notable is the enactment of the Patient Protection and Affordable Care Act. Most businesses affected by the new law worked through these insurance issues last year or took the one-year extension and are now implementing the new policies for 2015. Whether or not they personally agree with the Affordable Care Act, it is something that business owners have to implement; it is not something they can control. Stephen Covey writes in his book, The Seven Habits of Highly Effective People, "Reactive people focus their efforts in the Circle of Concern--things over which they have little or no control: the national debt, terrorism, the weather." As a business leader it is important to be proactive, focusing on the things you can control. One thing you can control is what health insurance plan you offer your employees. In addition, you also control what other benefits you provide your employees. Often being a proactive leader requires that you invest in your employees and take calculated risks.

A retirement plan should nearly always be included as part of an employee benefits package. Here's why: individuals without access to company-sponsored plans have two options for funding their retirement, the traditional IRA and the Roth IRA. Having two options sounds generous ... until you do the math. While there is no magic number for how much an individual should save toward retirement each year, a decent rule of thumb would be somewhere around 15% of annual compensation. For someone making $60,000 per year, that means they would need to put $9,000 per year into a retirement account. However, the IRS only allows individuals to contribute $5,500 each year, or $6,500 if the person is 50 or older, to their IRAs. This means an employee who makes $60,000 without an employer-sponsored retirement plan maxes out their retirement savings at somewhere around 10% of annual compensation.

Now let's take a look at what types of employer-sponsored retirement plans are available. There are two broad types of plans, known as either defined-benefit plans or defined-contribution...