In the world of small businesses, it’s not uncommon for owners to resist offering 401(k) retirement plans to employees.
The reasons are different for every small business, but mainly, small business owners say they don’t offer 401(k) retirement plans to employees because their company is too small, plans are too expensive to set up and/or manage or they can’t afford a matching program.
But employee turnover is high, and something like offering 401(k) retirement plans could make a difference in retention and employee satisfaction.
Only about 25% of small business owners offer such plans currently, according to a survey by ShareBuilder.
In reality, there are many ways employers can offer 401(k) plans to employees – no matter what the size of the business. There are many options – including ones that don’t offer company matching.
Still, misconceptions remain – especially when it comes to how much it will cost to set up and maintain.
One way small businesses can participate is to offer employees pooled employer plans. These plans came about after the Setting Every Community Up for Retirement Act (or SECURE Act) in 2019. These pooled employer plans let employers join together to offer a plan that is sponsored by a registered provider.
One goal of the SECURE Act was to make retirement plans more accessible, as there was a real gap for those employed by small businesses or those who were self-employed.
However, with the SECURE Act changes, and more awareness about the importance of saving for retirement early and often, more and more employees are asking about changes and demanding access to 401(k) retirement plans.
Do you still have questions about retirement planning options, or how your small business can participate?
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If you have other questions about retirement plan loans,email us or call 937.308.0758.
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