How to ask your manager or boss about a 401(k) for your company

Employees working for small businesses may feel that the benefits and perks offered by larger corporations are more attractive. Traditionally, organizations with larger budgets may have been in a better position to offer robust compensation and benefits packages. These days, however, technology has helped streamline the administration of many benefits programs—including retirement plans—resulting in more cost-efficient options for employers and their employees. 

This allows small businesses to provide great benefits packages that suit their employees. Yet, many small business workers may still be without retirement benefits. While more than half of Americans have access to retirement benefits, small business employees are disproportionately affected, as 63% of small business employees lack access to a retirement plan.

Whether you’re in HR, operations, or another role working at a small business that lacks retirement benefits, requesting your company consider a retirement plan could be beneficial. Here are four steps to encourage your employer to administer benefits programs that meet your needs, while also helping them meet their business goals.

1. Provide data

If you want your request to be taken seriously, do your research. Don’t show up at a meeting or start a conversation about adding a 401(k) plan without having some data to back you up. What kind of data should you gather?

• Explain the retirement savings gap: Working Americans face a trillion-dollar retirement crisis. According to the Employee Benefit Research Institute, Americans need to collectively add $3.68 trillion to their accounts to be on track for retirement. At Human Interest, we believe that employers can help narrow this margin—and quantifying the size of this gap to your employer may help them realize the magnitude of this decision.

• Do research about companies of a similar size in your industry. What are they offering their employees for retirement benefits? What are typical 401(k) plans in your geographic location? According to Vanguard’s How America Saves 2024 report, 96% of plans (covering 99% of participants) offered some sort of employer contributions as part of their employee benefits package.

• Employee surveys: Has your company conducted a company-wide employee survey related to benefits? Check the results and highlight any ways in which a 401(k) might improve those results, or might address issues that came out of the survey. No recent surveys? You might consider suggesting that your company conduct a survey.

• Retention rates: Have people left your company in pursuit of other jobs that offered a 401(k) plan? Maybe some potential hires didn’t join the organization because there wasn’t a retirement plan in place. According to industry data, there's a 40% lower chance of new employees quitting their jobs in the first year when they have access to a retirement plan.

• Responses to common objections: Not enough time? Not enough money? Here are some hard facts to help explain why it’s easier than expected to get a 401(k) even as a small business and why a 401(k) match is worth it.

• Legal requirements: Will your state soon be legally required to offer a 401(k)? As of October 2024, at least a dozen states have active state-mandated retirement programs, while 20+ states have enacted one. You may want to get ahead of any state mandates about retirement plans because failing to comply could cost your employer hefty fines.

2. Check in with your co-workers

Make sure fellow employees understand the benefits of a 401(k) and that they’d be on board with you asking about it as a new offering. It’s much more convincing to be able to say, “5 out of 6 people on our sales team say they’d definitely contribute to a 401(k)” or “Our Director of Engineering mentioned that it’s been difficult to hire without a 401(k)” as opposed to “I wish our company had a 401(k)”.

3. Talk to the right person

It’s probably best to start the discussion about a 401(k) plan with a decision-maker at your company. Many times, this can be your direct manager or your department head. They can advocate for employee interests to company leadership and may know of upcoming benefits changes. You may consider meeting with your company’s HR manager, someone on the administrative side of the business (COO, general manager, or accountant), or the business owner (CEO or founder), preferably in that order. 

If you are a member of the decision-making process—such as a member of the HR, operations, or administrative team—it may still be important to gain buy-in from someone else on the team.

Regardless of your role, you should frame the conversation about retirement benefits in terms that resonate with decision-makers—primarily focusing on business outcomes, financial sense, and competitive strategy. The following discussion points can help illustrate the business advantages of starting a 401(k) plan:

• Tax credits: Depending on the business size and plan type, tax credits might be available for starting a new retirement plan. The SECURE Act (and SECURE Act 2.0) provides tax incentives for small businesses to offset the costs of starting a 401(k) plan.

• Tax deductions for the business: Employer contributions to qualified retirement plans are generally tax-deductible, lowering the company's overall tax burden.

• Tax benefits for employees: While an indirect benefit to the business, pre-tax employee contributions can help lower taxable income. This can be a valuable part of the total compensation package that doesn't increase direct salary costs proportionally.

4. Express your gratitude

When you broach the topic of offering a 401(k) as part of the benefit, start out on a positive note: express your gratitude for the benefits that are already in place. Offer some personal insight as to how the healthcare coverage, transportation program, or childcare subsidy has helped improve your experience as an employee.

From the standpoint of an employer, benefits plans have an impact on the bottom line, both in terms of employee retention and hiring new employees. If you’re talking with your company founder, manager, or another representative, they want to know that their effort to deliver positive programs for employees hasn’t gone unnoticed.

5. Offer to help

If your manager or leadership team expresses interest in your idea about a 401(k) plan or the suggestion to add an employer match, offer to research what options exist:

• Conduct research on your own by talking with other small businesses to find out what 401(k) providers they use; then, schedule a time to meet with those providers.

• Create a team of people to help tackle the research; divide up the inquiries, meet regularly, and work together to draft a summary of your findings.

At slightly larger companies, there’s often an employee benefits committee that does vendor research and regularly evaluates offerings on behalf of all employees. You’ll want to look for a 401(k) provider that makes administration easy and affordable for small to medium-sized businesses.

The financial benefits of a 401(k) match

If your company already has a 401(k), and you would like your employer to add a match or increase the current match, here are 10 things employers should know about an employer match. Among its benefits, an employer match can help boost plan participation, help attract new talent, and streamline plan compliance. An employer match may even be more effective than a bonus or raise. With a typical bonus or raise, employees pay income and employment taxes on the money they receive. Additionally, employers pay Social Security, Medicare, unemployment, and other payroll taxes when they offer an employee a raise or a bonus.

The bottom line

Planning and saving for your retirement is something to start doing sooner rather than later. It's important to help your employer understand how a retirement savings plan can be a powerful tool to not only incentivize employees to be more productive but also drive the business forward. If you want to set up or switch to a 401(k) that’s great for employees and employers, let your company know about Human Interest.