Everything Small Business Owners Need to Know About the 401(k) MatchFind out how best to offer this perk to your employees.

In a world wherecompensation and benefits are the No. 1 way to attract and keep top talent, 401(k) matching tops the list when it comes to meaningful perks with value that grow over time. While an employer contribution isn't required by law, it's a great way to show you're invested in employees' long-term happiness and financial security.

Related:Get Your 401(k) Fees Down Because Your Employees Deserve Better

无论你是推出t的退休计划he first time or brainstorming ways to upgrade your benefits package, here are the big factors to consider before introducing a 401(k) match, and what you need to know if you decide to offer one.

To match or not to match?

Many small businesses think they can't compete with larger companies, whose deep pockets seemingly afford everything -- including a generous profit sharing or 401(k) match program. But, in the retirement savings world, this isn't always the case (In fact, 52 percent ofGuideline's small business clients provide a match!).

Here are some reasons why a match program might be a good idea for your small business:

Tax benefits: Every dollar you contribute to an employee's 401(k) isexemptfrom federal, state and payrolltaxes. You can deduct up to 25 percent of compensation paid during the year to eligible participating employees as an employer match or profit sharing program from your business income taxes.

Recruitment and retention: It's no secret that the best talent expects the best compensation packages. People aretwice as likelyto be satisfied with their jobs when they're happy with its benefits. What's more, seasoned professionals expect not only a great 401(k), but a plan thatincludes an employer match.

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Business profit: Happy employeesperform better and generate higher profits. Think about it -- any person is more productive when he or she isn't faced with an uncertain financial future.Nine out of 10 householdsbelieve having a 401(k) makes it easier to save and think long-term, and employer contributions offload some of the pressure to set aside disposable income.

401(k) participation: If you're making the effort and investment to offer a 401(k), obviously the hope is that your employees will use it. But,according to the Department of Labor, about 30 percent of eligible American workers do not participate in their workplace retirement plans. If you're seeing low participation rates among your employees, offering a match is a great way to encourage enrollment.

Know your options: Types of employer contributions

Businesses have a few options when it comes to offering a match. Here are the major types:

For peace of mind: Safe Harbor contributions
Safe Harbor 401(k) plans are designed to ensure all workers receive fair opportunity to benefit from the plan. A Safe Harbor match requires making contributions to employee 401(k) accounts as a percentage of their salary. It's can be a costly upfront option, but the easiest way to make sure you pass compliance testing each year. Qualifying employer contribution types include:

• Basic match: Contribute 100 percent of employee 401(k) deferrals up to the first 3 percent of salary, and then 50 percent of deferrals of the next 2 percent of each employee's salary.
• Enhanced match: Contribute at least 100 percent of all employee 401(k) deferrals, up to 4 percent of their salary (not to exceed 6 percent)
• Non-elective contribution: Contribute at least 3 percent of each employee's salary, regardless of their personal deferrals.

Related:Here's How Much a Millennial Needs to Save Each Month to Retire With $5 Million

For flexibility: Discretionary matching contributions
With discretionary matching contributions, you decide what percentage of employee 401(k) deferrals or salary to match, with the flexibility of adjusting the matching amount as your business needs change. Keep in mind, a matching level will be easy to increase over time, but difficult to reduce without negatively affecting employee morale.

For sharing success: Nonelective contributions
Each pay period, you have the option of providing a contribution to your employees' 401(k) accounts based on salary, regardless of their contribution amount. A common type of nonelective contribution is profit sharing, which can either be a percentage of an employee's salary or a discretionary lump sum, typically after year-end. This option is ideal when profits aren't consistent, but you want to share success with employees when the company does well. The IRS allows several types of discretionary profit sharing formulas; here are the most common:

• Flat dollar amount: You allocate the same amount to each eligible employee. For example, $1,000.
• Pro rata (comp to comp): You allocate a fixed contribution amount among employees based on their relative salaries.

It's important to note that some companies do not provide a match at all. It's not required by law. You can always start a 401(k) plan without matching, and later decide to add one down the road when it makes sense for your business.

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