401(k) Specialist Issue 3 - 2024 - 44

401(k) END NOTES
Small Businesses: Overcoming Barriers
to Retirement Plans
By Stuart Robertson
SMALL BUSINESSES ARE NOT just a part
of the economic landscape of the United
States, they are its lifeblood, and according
to the U.S. Chamber of Commerce are
responsible for 63% of all new jobs created
since 1995.
However, a stark contrast exists in
retirement plan accessibility between large
and small enterprises. While nearly all large
corporations offer 401(k) plan benefits, a
significantly lower percentage, at most just
24% of small businesses with fewer than 50
employees (excluding the self-employed),
provide these essential retirement savings.
This disparity has profound implications for
millions of Americans as it can leave them
inadequately prepared for their golden
years.
Dispelling Myths
Misconceptions about the employee size
needed to offer a 401(k), unawareness of
tax credits, and cost of implementing retirement
plans have hindered small business
owners from offering these vital benefits.
A prevalent myth is that 401(k) plans are
exclusively for larger companies.
In reality, even the smallest businesses
including the self-employed can reap the
rewards of offering such plans, including
tax advantages, higher contribution limits,
Roth 401(k), and employee loan options.
Thanks to SECURE 2.0, which was enacted
to provide significant tax incentives for
small businesses, offering 401(k) plans can
be nearly cost-neutral, providing a secure
and affordable option for businesses.
Additionally, many believe employer
matching contributions are mandatory, deterring
some from offering plans altogether.
While matching can be a valuable employee
incentive, it is not a requirement for
44
ISSUE 3 2024 | 401kSpecialist.com
istrative costs for a 10-employee company
can be less than $100 per month and tax
credits and deductions apply here, too.
This affordability should reassure small
business owners that offering a retirement
plan is within their financial reach.
" By dispelling
these myths and
highlighting the
availability of costeffective
solutions,
it becomes evident
that offering a
retirement plan is
attainable for most
small businesses. "
establishing a 401(k). Know that tax credits
and tax deductions can help offset these
costs for small businesses that do provide
an employer match.
Concerns about the financial burden of
administering a retirement plan have also
discouraged some small business owners
from considering them. However, the
landscape has evolved with the emergence
of affordable options tailored to the needs
of small businesses. For instance, adminAffordable
Solutions Available
By carefully selecting providers that offer
low-expense investment options with a
focus on index funds, businesses can effectively
manage overall plan expenses for
all employees. All-in investment expense
including fund expense ratios can easily be
managed well under 1%, so more of each
employee's money stays invested in the
markets.
By dispelling these myths and highlighting
the availability of cost-effective solutions,
it becomes evident that offering a
retirement plan is attainable for most small
businesses. Doing so benefits employees
by providing a pathway to financial security
and enhances a company's reputation as
an attractive employer. To bridge the retirement
savings gap, removing the obstacles
preventing small businesses from offering
these essential benefits is imperative.
Stuart Robertson is the CEO of ShareBuilder 401K.
ShareBuilder 401k is committed to empowering
the self-employed, small businesses, and mid-size
companies with easy to use, full service, and
cost-effective retirement solutions to help them
achieve financial security
https://www.sharebuilder401k.com/blog/small_business_annual_retirement_trends_survey_2024/ https://www.sharebuilder401k.com/blog/small_business_annual_retirement_trends_survey_2024/
401(k) Specialist Issue 3 - 2024

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