Using Your Retirement Plan to Make Your Bids More Competitive

Kristi Pronovost ABC Keystone YP Blog, The Merit Shop Spokesman Blog

By: Cory Cuffley, CPA, CRPS®, AIF®, Financial Advisor, Stonebridge Financial Group

In today’s world, retirement plans such as 401(k)s are not only commonplace, but are almost a requirement. Whether you are talking about attracting new talent or retaining your current employees, giving people the opportunity to save for their retirement is something most employers need to consider. Defined Benefit plans are far less common these days. As such, most employees are realizing the need to plan for their own retirement. Sure, employers will reap the benefits of their company contributions being tax deductible, but what if there was another way a contractor could leverage their retirement plan to help make bids more competitive? Prevailing wage retirement plans can allow employers to do just that.

A prevailing wage retirement plan is a plan established by an employer subject to the prevailing wage regulations. These employers can engage in either Federal or State level contracts. In general, projects subject to prevailing wage must provide wages and benefits that would be provided to a union contactor. This total prevailing wage compensation has two parts: the prevailing wage and the prevailing wage fringe. Contactors have the option of either paying both pieces in cash or electing to pay a piece of these as a contribution into the retirement plan.

Some of the benefits of using this strategy are:

1. Cost savings. Payments made into the retirement plan save the company in payroll taxes.

2. More competitive bids. The cost savings can help translate to a lower and more attractive bid.

3. Discrimination testing. These payments can help business owners pass the required discrimination testing for their retirement plan.

4. Increasing contributions for owners. Because of the nature of these payments, owners who were previously restricted in their own contributions will have more flexibility.

If you have any questions on setting up a prevailing wage plan or have not reviewed your current plan in the past year, consider a complimentary retirement plan consultation.


Securities offered through Triad Advisors, LLC, Member FINRA/SIPC. Advisory services offered through Triad Hybrid Solutions, LLC, a registered investment advisor. Stonebridge Financial Group, LLC and Triad Advisors, LLC are not affiliated.

July 29, 2019