Less Than a Quarter of Small Businesses Offer 401(k) Plans to Employees

Less than a quarter of small businesses currently offer 401(k) plans for employees, according to a recent survey. And this low rate may be largely due to incorrect assumptions.
The survey , which was commissioned by 401(k) provider ShareBuilder 401k, found that only 24 percent of small businesses with between 1 and 50 employees offer 401(k) benefits to employees. The survey also found that 55 percent of respondents believe that their business is too small to access a plan, 28 percent believe they cannot afford to offer a company match, and 22 percent believe that offering plans at all would be too expensive.
However, many of these assumptions are not true. In fact, businesses of any size can offer 401(k) plans, even self-employed businesses. And matching is not required. Additionally, recent legislation known as the Secure Act 2.0 provides tax incentives that can make offering retirement plans more affordable for small businesses.
Stuart Robertson, CEO of ShareBuilder 401k, said in a statement , “Nearly half of all Americans work for small businesses, and 401(k)s have proven effective in helping employees build meaningful nest eggs for retirement. The need to debunk these misconceptions about the access and affordability of 401(k) plans for small businesses is essential to help a large swath of Americans to have the option to retire with financial security. As a country and industry, we must spread awareness about the Secure Act 2.0 tax credits and the tailored solutions available to any size business, including the self-employed, to help ensure a more secure financial future for all and avoid a retirement crisis many indicate lies ahead.”
Retirement plans like 401(k) options can help small businesses attract top talent, improve morale, and limit turnover. But many business owners simply assume that these options are out of their reach.
It’s certainly possible that some employers are unable to afford or manage these options. But it’s important to look into the actual rules and incentives that can impact the feasibility of adding such a program. You may find that it’s more realistic than you thought, and thus be able to add a meaningful benefit that both current and future employees will value.
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This article, " Less Than a Quarter of Small Businesses Offer 401(k) Plans to Employees " was first published on Small Business Trends