Talking With Clients About a Retirement Savings Plan

Small Business Accountants: Should You Talk to Clients About a Retirement Savings Plan?

According to a May 2022 report from the Center for Retirement Research at Boston College, only 48% of small businesses with fewer than 50 employees offer a retirement plan. Not only does this disparity contribute to the retirement savings gap, but retirement benefits are increasingly seen as desirable by employees, meaning small businesses are missing out on a valuable retention tool.

However, many small business owners work with an external accountant, and those accountants have a role to play in this discussion. As a trusted and respected authority, your accountancy practice can encourage small businesses to open a retirement plan, score a unique set of tax credits, and help close the savings gap. All this, while also deepening your relationships with clients and furthering your own bottom line. 

3 Reasons to talk with clients about a retirement savings plan

Is it time to talk to your clients about offering a retirement savings plan to their employees? Yes! Here are three reasons why.

why should you talk to clients about a retirement plan? Client retention, popularity and mandates, valuable guidance

1. Retirement plans can help with client retention

It’s not just the small businesses themselves that could benefit from a new retirement plan; you—as their accountant—may benefit, too. 

Retirement plans carry the unique benefit of following someone for the rest of their life. By helping an employer set up a company-sponsored retirement plan, you have the opportunity to deepen your relationship with the business owner and their employees. 

For example, discussions on finding the right retirement plan can spur conversations about a client’s cash flow concerns later in life or the state of their personal investments. These are all opportunities for you to provide valuable advice and ensure your clients receive the best service possible.

Further, retirement plan recommendations can be more than just a client retention tool—they can become a source of brand equity that turns you into a trusted advisor. With the wide variety of retirement plans a firm may choose to offer, it can be overwhelming for a business owner to pick one, even if they’re interested. Accountants who can deliver the right plan to their clients, or connect them with a knowledgeable advisor, can position themselves as the trusted partners business owners are looking for.

2. Retirement plans are growing in popularity (and being mandated)

Perhaps the most straightforward reason accountants may want to recommend a retirement plan is the growing number of state-mandated retirement plans. The accompanying legislation often mandates that a business offer a retirement plan of its own or participate in the state plan, depending on the number of employees they have. 

In some states, having even a single employee subjects a business to the mandate. For many, staying ahead of legislation that will soon mandate offering a plan is reason enough to start one now.

That said, there are many benefits to offering a retirement plan that extend beyond “it may soon be required anyway.” Just a few of these include:

  1. SECURE Act tax credits: Eligible employers can claim a benefit of up to $5,000, for three years, for the “ordinary and necessary costs” of starting a qualified retirement plan. There are also additional credits available for certain automatic contribution arrangements.
  2. Tax-deductible contributions: Not only are matching contributions within certain limits deductible on an employer’s federal income tax return, but they’re not subject to Social Security or Medicare taxes, either.
  3. Business owners may benefit personally: Business owners may generally contribute to their company-sponsored retirement plan too, allowing them to better save for their own retirement.
  4. Retirement plans may help with employee retention: In WTW’s 2022 Global Benefits Attitudes Survey, nearly 60% of employees surveyed cited their employers’ retirement benefits as an important reason they remain with their current employer, compared with 41% in 2010.

3. When you speak, small business owners listen

Accountants provide small businesses with valuable financial guidance, and when it comes to retirement, surveys have repeatedly shown that proprietors listen.

You are your clients’ trusted advisor. As such, they listen to you. Small business owners value the opinion of their accountant, and will often act on the advice they are given. Accountants who incorporate retirement benefit recommendations into their practice can significantly move the needle on the issue of retirement.

Where to begin the retirement plan search

Patriot and Vestwell have partnered to offer affordable retirement plans for small businesses across the United States. Vestwell’s digital retirement platform directly integrates with Patriot’s payroll software, making it easier for you to offer and administer a company-sponsored 401(k). By combining technology with best-in-class retirement plans, Vestwell has created custom programs for Patriot customers that are incredibly affordable and easy to set up and use.

Interested in learning more? Explore our partnership here.

This is not intended as legal advice; for more information, please click here.

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