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What Can An Employer Offer An Older Worker In Place Of A Retirement Plan

Periodic Contributor

What Can An Employer Offer An Older Worker In Place Of A Retirement Plan

My employer would like to hire older workers but would like an alternative to a 401K or something like that would more appeal to the younger workers.


Many older workers (myself included) are not looking for a "retirement" plan, so what do you think would be an attractive alternative to the older applicant?

Honored Social Butterfly

How old are the workers?

How many employees does the employer have?

Is this a sole proprietor?


"Retirement" plans are actually regulated by the IRS therefore those are the rules that have to govern.

What is wrong with a ROTH IRA -

What would be wrong with a SEP IRA -


What's wrong with boosting their pay - with that option, they would pay more into SS and get a higher benefit when they start drawing their Old Age benefit. 


You really haven't described the objective here for the older employees or the employer so any answer is gonna be very broad and many details are missing to give a better answer.


Do you really think that anybody can have too much money set aside for "retirement" no matter its source.




It's Always Something . . . . Roseanna Roseannadanna
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Periodic Contributor

A small, sole proprietor business that is trying to offer employment to older workers!  Not every older worker is interested in retirement accounts.  My employer would like to be able to offer the older worker something they *would* rather have.  Of course if the answer is going to be mostly unhelpful snark, I'll pass.

Honored Social Butterfly

The question and suggestions I made aren't intended to be snarky but details are important to your question.


The overall problem seems to be that the employer has limits set by the IRS on "retirement accounts". Primarily, if the employer contributes to a plan where the employee does not contribute - like a SEP (Simplified Employee Pension) - it has to be to everybody or most everybody based on hours worked / period of longevity - because all the $$$ are coming from the employer.  It is a great plan for a small sole proprietor business and for all the employees that qualify work-wise.  It is flexible, meaning that in good years, the employer contribution could be larger; in leaner years - smaller and if there is no reported profit from the business - no employer contribution.


Here is a pretty simple explanation of a SEP IRA.



Of course, it has to be deposited into a retirement account for each employee to qualify but if the employee is already 59-1/2 years old, they could immediately draw upon it, penalty free - but with individual tax consequences when they take a distribution.


If the objective is for the employer "to be able to offer the older worker something they *would* rather have" - I am reading that statement as NOT a retirement account - if that is the case, it has to come to them as some sort of pay (wages) and would be reported as such.


Can you describe what you think the older workers would rather have?  I am understanding this as money - but it could be also a benefit like employer provided health insurance where the employer pays part and the employee pays part.



It's Always Something . . . . Roseanna Roseannadanna
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Periodic Contributor's not that my employer would tell older new hires they can't participate in the Safe Harbor plan, of course they can.  If they were not interested he wondered if there was something else he could offer that didn't really depend on long-term employment to be worthwhile.  I told him I didn't know of anything (and no, I don't contribute to the Safe Harbor plan but my employer still contributes to it as a perk of employment, maybe that's enough.)  We talked about  maybe a higher rate of pay, but he doesn't want there to be animosity between the younger and older due to pay disparity.  I'm stumped, he's stumped, and I'm just poking around to see if there is anything or if anyone had a creative suggestion.

Regular Contributor

Hi Starscreeam,

  One way to find out is to ask them - what would they prefer?  For example, maybe a 30-hour workweek, for those workers who are also caregivers.  For them, 40 hours might be too difficult, if they are involved in running errands for the people they care for.

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