Retirement programs and packages are offered to staff by many organisations across the U.S., but are they doing enough to help their employees prepare for retirement? While it might sound like an unnecessary act as bosses have already done their part by offering their workers a retirement package, it can be of benefit to everyone to help them prepare for such things as saving to ensure that their daily living requirements can be met adequately; and making preparations for the rising cost of medical expenses.
Do you know about HSA’s?
If the answer is no, then have a look at the following information and familiarise yourself with this tax preferred savings vehicle that can help your employees.
401(k)’s are more traditional savings vehicles popularly opted for by employers, and they give savings options for meeting the general financial needs of retiring. HSA’s on the other hand (health savings account) are designed to enable the employee to save for any medical costs they may incur while retired, but also while they are still actively employed.
HSA’s offer many advantages to employees and can add a beneficial element to any business’s retirement benefits package. In fact, experts say that the HSA is the single most valuable tool you can provide your employees facing retirement, since it provides a mechanism to save money for future health costs totally tax-free.
Why not think about offering your employees the option of pairing an HSA with a qualified deductible health plan, or HDHP? This would be an appealing alternative to the usual premium coverage and could be considered as an enhanced retirement program that may be of interest to many of your employees.
Educating your employees about the tax advantages of HSA’s
There are triple tax advantages for those who have an HSA, and employers should really be helping to educate their staff about this and about how to use the plan to ensure that they are better prepared for their retirement.
Here is the HSA triple tax advantage in a little more detail:
Contributions made to HSA’s are pre-tax, and the funds grow on a tax-deferred basis; withdrawals are not taxable if they are used to help fund medical expenses that qualify as medical expenses. Pre-tax HSA contributions also circumvent the Federal Insurance Contributions Act or FICA taxes, giving employees and employers the opportunity to save money.
When can an HSA be started?
They can be started and funded at any time throughout the year, not just when there are specific enrolment periods, and it’s important to advise your employees of this fact so that if they want to, they can start one well in advance of their retirement.
Just how important is it to help your employees prepare for their retirement?
The overall wellbeing of your organisation can be greatly affected by employee assessments of their retirement readiness. Do they have the financial capacity to retire and maintain the same standard of living that they are currently experiencing? While it should be in the interests of all employers to help their workers get ready for retirement, irrespective of the benefits to their company, there are significant benefits that include fostering sound workplace planning that paves the way for more predictable staff transitions.
For more detailed information about helping your employees prepare for their retirement, seek guidance and counsel from a professional payroll solutions company.