Small Businesses and 401(k)s: A Modern Perspective

It's a common misconception that 401(k) plans are too complex or costly for small businesses. However, with recent updates under SECURE 2.0, retirement plans have become more accessible and advantageous for both employers and employees.

Fewer than one in four small businesses currently offer a 401(k), but this number is increasing as more companies recognize the benefits. Businesses with up to 100 employees might qualify for up to $5,000 per year in tax credits for the first three years, and there’s an additional credit of up to $1,000 per employee for employer contributions. These incentives make it easier than ever to offer a retirement plan.

Most new 401(k) plans now include auto-enrollment, which significantly boosts participation rates. A well-designed retirement plan can help attract and retain top talent while lowering taxable income, with both plan expenses and employer contributions being tax-deductible.

 

Today’s market offers more flexible and affordable options than ever before, making this an ideal time to consider implementing a 401(k). Offering such a plan is no longer a heavy administrative or financial burden for small businesses.

• Eligibility typically requires earnings of at least $5,000 in the prior year.
• Auto-enrollment is standard for newly established plans, enhancing participation.

Explore various retirement options to remain competitive in talent attraction. Consider speaking with a financial or benefits advisor to create a plan specially tailored to your business needs.

 

 

Advisory Services offered through LexAurum Advisors, LLC, an SEC-registered investment advisor.