The ultimate guide to starting a small business 401(k)

Considering a 401(k) plan? Smart choice. 401(k) plans provide numerous benefits for all types of employers—including small businesses. This guide reviews the ins and outs of starting your own plan. To help, we’ve broken things down into five easy steps.

Keep reading to learn more—or click to download for free.

Considering adding a 401(k) plan to your business' benefits offerings? You aren’t alone. One of the most popular types of retirement plans in the United States, 401(k) plans accounted for about 70% of all employer-based defined contribution plans as of late 2021.¹

The Revenue Act of 1978 added Section 401(k) to the Internal Revenue Code. This enabled employees to avoid paying taxes on deferred compensation and opened the door for employees to save pre-tax money in retirement plans. In 1981, the Internal Revenue Service (IRS) provided employees the ability to fund 401(k) accounts through payroll deductions. And just two years later, nearly half of all large firms offered a 401(k) plan or were considering one.

At its core, a 401(k) allows employees to contribute a portion of their compensation to a qualified retirement plan and, if making pre-tax contributions, defer income tax on those contributions until they are distributed in the future. 401(k) plan assets can be invested into a range of investment vehicles, including stocks, bonds, cash equivalents, and more. 

The benefits of offering a 401(k) for employees and employers

401(k) plans come with a slew of benefits for all types of employers—from small businesses to enterprises. For example, some small businesses may receive tax incentives by starting a 401(k) plan. Employer contributions also allow companies to match funds that participants defer—which can help recruit and retain talent. And plans can be designed to include automatic enrollment features, which can help encourage participation. 

Help your employees (and yourself) save for the future 

Tax benefits are one of the most attractive 401(k) advantages. Employees and business owners can make regular contributions on a pretax basis, which can lower their taxable income. This means participants don’t have to pay federal income tax for contributions up to the $20,500 limit in 2022 ($27,000 if older employees take full advantage of a catch-up contribution) until a distribution is taken. Earnings accumulate in 401(k) accounts on a tax-deferred basis, meaning dividends and capital gains aren’t subject to tax until participants make withdrawals.

For more information, refer to 401(k) advantages: Everything you need to know

Save on employer tax savings

SECURE Act tax credits

Employers can also benefit from tax savings by offering a 401(k). When passed, the SECURE (Setting Every Community Up for Retirement Enhancement) Act increased tax incentives for specific small business owners starting their first 401(k) plan. For qualifying businesses, this includes a tax credit of up to $5,000 per year for three years to cover expenses from setup and administrative tasks. Adding auto-enrollment to the plan—which has been proven to increase participation and encourage employees to save—also provides an additional $500 tax credit per year up to three years.

Employers can claim the SECURE Act 401(k) tax credits if they meet the following criteria:

  • 100 or fewer employees received $5,000 in compensation in the prior year

  • Have at least one non-highly compensated employee (NHCE)

  • Employees didn’t benefit from a prior plan offered by the employer in the three tax years before the first year it was eligible for the credit

Deductible expenses

Employers can also match a portion of the employee’s contribution. According to Vanguard, 96% of plans provided an employer contribution in 2020. While employers aren’t required to make matching contributions, those who do so can benefit from significant tax incentives. That’s because money a business contributes to the 401(k) is tax-deductible, up to 25% of the total compensation of eligible employees each year, which can provide ongoing tax benefits. Ultimately, an employer match can simultaneously boost your bottom line, while improving the well-being of your employees.

Stay competitive by offering a retirement benefit

Not only can offering a 401(k) provide tax benefits for employers, but it can also help your business compete when recruiting and retaining top talent. In fact, employees said healthcare and retirement were the two primary benefits they consider when evaluating a compensation package, while 78% of employees rated retirement plans as a “must-have” benefit. Additionally, half of all Americans say they would leave their current job for another with better benefits. 

Setting up a 401(k) plan for your small business in five steps

This guide reviews the ins and outs of starting a 401(k) plan. To help, we’ve broken things down into five sections:

  1. Choosing the type of retirement plan you want to offer 

  2. Determining the design of your 401(k) plan 

  3. Selecting your 401(k) plan provider

  4. Making your 401(k) plan official

  5. Maintaining your 401(k) plan

We’ve also included some FAQs, should you need any specific questions answered during the process. But before we dive too deep, let’s dig a little deeper into some of the benefits of a 401(k) plan.

1. Choose the type of retirement plan you want to offer 

Different types of retirement plans meet different needs. The first step in setting up a plan is deciding which type of plan is best for your business.

Traditional 401(k) plan

To reiterate, the traditional 401(k) plan is one of the most common retirement plans. These plans allow for high contribution limits, do not set limitations on the number of eligible employees, and offer more flexibility in design options. Employees may appreciate the opportunity to contribute several thousand dollars more per year to their retirement accounts when compared to an IRA.

Contribution limits for 401(k) plans 

Participants in 401(k) plans can save up to the contribution limits established by the IRS:

  • Contribution limits for 401(k), 403(b), and profit-sharing plans are $20,500 in 2022 (up from $19,500 for 2021 and 2020). 

Employees with a 401(k), 403(b), or 457 account who are 50 years or older can contribute additional funds annually to their plans. Catch-up contribution limits are $6,500 in 2022 (the same they were in 2021 and 2020) for a total contribution of $27,000. Click here to learn more about the benefits of 401(k) catch-up contributions for older workers.

Ultimately, a traditional 401(k) can help your business scale without needing to change plans. A traditional 401(k) may be offered in conjunction with other types of retirement plans to provide your business with more flexibility. Luckily, 401(k) plans have become increasingly attainable for small businesses. Technology now automates much of the manual processes required by 401(k) plan administration, making plans easy and affordable to maintain.

Roth 401(k) plan

Introduced in 2006, the Roth 401(k) deferral type combines elements of the Roth IRA and the traditional 401(k). Contribution limits for Roth 401(k) deferral types are the same as a traditional 401(k), but adding a Roth component to a plan means that participants avoid paying taxes on future withdrawals. Accordingly, the main difference between a Roth and traditional 401(k) features are in how contributions are taxed and how withdrawals are treated: 

  • Contributions: Traditional 401(k) contributions are made pre-tax, while Roth 401(k) contributions are made after paying taxes.

  • Withdrawal rules: Traditional 401(k) distributions are taxed in retirement, as opposed to Roth 401(k) distributions, which are tax-free upon withdrawal if certain requirements are met. With a traditional 401(k), all money is taxed upon withdrawal (generally in retirement). 

As a rule of thumb, Roth 401(k) features are favorable for participants who think their overall income will significantly increase over time. In these scenarios, it may beneficial for participants to pay taxes on their current income, as opposed to paying taxes on a projected higher income. Not all 401(k) plans feature both a traditional and Roth deferral option—so it’s important to confirm a prospective provider offers both if you’d like to offer flexibility to your employees. 

Read more about Roth 401(k) vs. Traditional 401(k): Which is right for you?

Differences between SEP-IRA, SIMPLE-IRA, and SIMPLE 401(k)

Employer-provided retirement plans come in many shapes and sizes beyond the traditional and Roth 401(k). For example, a simplified employee pension plan (SEP) allows employers to contribute to traditional IRAs (in the form of SEP-IRAs) on behalf of employees. Businesses of any size are eligible to set up a SEP-IRA, including self-employed individuals. These easy-to-administer plans are funded exclusively by employer contributions (meaning employees cannot contribute) and are similar to a traditional IRA account.

Similarly, the SIMPLE IRA and SIMPLE 401(k) were designed to help small employers with fewer than 100 employees. For small businesses, SIMPLE 401(k)s and SIMPLE IRAs plans can simplify some of the processes of adding a retirement plan. For example, SIMPLE 401(k) plans are not subject to top-heavy nondiscrimination testing rules that apply to traditional 401(k) plans. However, both SIMPLE IRA and SIMPLE 401(k) plans come with downsides, including lower contribution limits, inflexible plan design options, and required employer matching contributions. 

Eligible participants may make pre-tax salary deferrals to a SIMPLE IRA (Roth deferrals are not permitted). Unlike their SIMPLE IRA counterpart, SIMPLE 401(k)s offer the same opportunity to design eligibility for participants as traditional 401(k) plans do. The annual max contribution limit for both SIMPLE IRA and SIMPLE 401(k) plans is $14,000 (compared to the traditional 401(k) limit of $20,500), and catch-up contributions for employees age 50 and over max out at $3,000.

Safe harbor 401(k) plan

A safe harbor 401(k) plan design includes a mandatory employer match or nonelective contribution for eligible employees. In exchange for making guaranteed contributions, the 401(k) plan is deemed to pass some of the required annual compliance tests, giving HCEs the opportunity to defer up to the annual limit each year. 

Any 401(k) plan can be designed to include a safe harbor contribution—but employers should understand that these contributions are fixed and mandatory and can not be removed before the end of the plan year. In most cases, that employer contribution is required to be immediately 100% vested. 

Learn everything you need to know about safe harbor 401(k) plans.

Solo 401(k) plan

If you’re an entrepreneur without employees, you may qualify for a 401(k) plan for you and your spouse. Solo 401(k) plans follow the same rules as an employer-sponsored 401(k), including contribution limits. These plans (also referred to as one-participant plans) have the same rules and requirements as a traditional 401(k) plan and cover a business owner with no employees (other than a spouse working for the business). The main difference is that individuals wear two hats—both employee and employer—meaning contributions can be made in both capacities:

  • Elective deferrals up to 100% of compensation within annual contribution rates:

    • $20,500 in 2022, or $27,000 in 2022 if age 50 or over; plus

  • Employer match and nonelective contributions up to:

    • 25% of eligible compensation as defined by the plan

2. Determine the design of your 401(k) plan 

Once you determine which type of plan is best, it’s time to customize it to fit your needs. One size does not fit all when it comes to 401(k) plan design.

From vesting schedules to employer matching contributions, here are some plan design options to consider.

Should you offer a 401(k) match?

Many businesses offer a 401(k) match in which they contribute additional money to the plan based upon the employee’s deferrals, which, in turn, can help incentivize employees to increase their own contributions. While not mandatory, we found that 75% of all Human Interest plans offer an employer match1. Match programs usually incorporate one of two figures when calculating total match contribution: a percentage of the employee’s own contribution and a percentage of the employee’s salary.

There are many different 401(k) employer match types. Of all the plans at Human Interest, 31% offer a single-tier match formula, while 15% of plans offer a multi-tier match formula. Of those Human Interest plans that provide a match, 42% offer a 100% match on the first 4% of compensation deferred1. 

Click here to see what a 401(k) employer match may cost your business.

Should you implement a profit-sharing feature?

A 401(k) plan may include a profit-sharing contribution (also called a nonelective contribution) in addition to, or instead of, a matching contribution. While a profit-sharing plan can be set up separately from a 401(k) plan, it’s common to include a profit-sharing contribution within the 401(k) plan itself. This allows the employer the benefit of a profit-sharing plan without having to set up and maintain two plans. 

If the 401(k) includes a profit-sharing contribution, the plan document must state if the contribution is discretionary (meaning the employer decides each year whether or not it wants to make a profit-sharing contribution) or fixed (meaning the employer is guaranteeing it will make the contribution each year). The plan document must also state how any profit-sharing contribution is allocated. 

Profit-sharing contributions work both as an employee incentive and retention device. However, if designed properly, they can also allow small employers to contribute more to their own accounts. Profit-sharing contributions are limited to 25% of the participating employee's compensation for the year. This limit is shared with any matching contribution to the plan in the same year so if the employer makes a match, the amount of profit-sharing contribution it can make will be reduced.

Read more: How a profit-sharing plan is different from a traditional 401(k)

401(k) vesting schedules

In a retirement plan, “vesting” refers to the employee’s ownership of any employer contributions made to their plan account. An employee’s salary deferrals are always immediately vested, meaning that employees “own” these funds. However, employer contributions (i.e., match and/or profit-sharing) may not be immediately vested, depending on the plan terms. The plan may include a vesting schedule that states when an employee becomes vested (owns) the employer contributions. There are two types of vesting schedules:

  • Cliff vesting: Employees earn the right to keep employer benefits after a specified period of time. For example, if a plan has a three-year cliff vesting schedule, the employee will not own any of the employer contributions in their account until they have completed three years of service with the employer. If the employee leaves before the three years are completed, the employer contributions in their account will be forfeited. 

  • Graded vesting: Employees gradually earn the right to keep employer contributions over several years of service. For example, if a plan has a six-year graded vesting schedule (prior to two years of service 0% vested; after two years of service 20% vested; after three = 40%; after 4 = 60%; after five = 80%; after 5 = 100%), an employee who leaves after three years of service will own 40% of any employer contributions in their account. The remaining 60% in their account will be forfeited. 

There are special rules related to when the forfeiture of unvested balances can actually occur.

Note: “Vesting” is different from “eligibility,” which refers to who may participate in the 401(k) in the first place. Common eligibility requirements include age (must be over 18 or 21 years of age), or the number of hours or length of time worked (e.g., part-time workers).

3. Select your 401(k) plan provider

Once you determine what’s best for your business, it’s time to shop around for plan providers. There are several factors employers should take stock of when considering a 401(k) provider, including the following:  

  • Transparent, low fees for both plan management and investments

  • Easy setup options that decrease HR workload

  • Robust technology including integration capabilities (e.g., payroll integration)

  • Compliance support, including nondiscrimination testing, annual notices, and more

  • Superior customer service for employer administrators and employees

  • Flexibility for plan design options

Let’s dig a little deeper into a few features to consider—and how to assess what fiduciary responsibilities you may want to outsource.

What small businesses should consider when selecting a 401(k) provider

  • Quality: For starters, it’s worth considering the status of the provider itself. This means examining the health of the business (i.e., financials or funding details), their financial structure, and the caliber of customer service they provide. It’s also important to evaluate how much support or education both your business and your team will desire, and what support systems your prospective provider supplies. 

  • Technology: If you’re a small business owner, for example, you most likely have tons of work on your plate—and adding 401(k) plan administration would be no small feat. Similarly, your employees may want onboarding or education offerings at their disposal, should they need assistance setting up their plan. In these scenarios, it may be worthwhile to consider a tech-forward 401(k) provider that automates most of the manual work of plan administration. 

  • Fees: It’s also worth looking for providers that are transparent about their pricing structure. For example, some providers may advertise low costs, but actually add in additional transaction fees that can add up over time. When comparing providers, look for affordable, transparent 401(k) plans with low-cost funds.

Benefits of integrating your payroll

Administering a 401(k) is a multistep process that hinges on payroll deductions—and there’s a lot at play behind the scenes. Employee contributions must be transferred to the 401(k) plan’s trust each payroll cycle within timeframes established by the Internal Revenue Code (IRC) Employer contributions must be deposited in the plan’s trust within timeframes established by the plan document and the IRC. Keeping up with these deadlines can be challenging. 

Combining 401(k) plan administration with the payroll process can help streamline everything from tracking employee eligibility to depositing employee contributions to reporting payroll data each pay period. Human Interest integrates with more than 100 payroll providers to make it seamless to administer 401(k) plans.

Click here to read more about the advantages of integrating payroll with 401(k) plans.

Why should a business include 401(k) automatic enrollment?

As defined by the IRS, automatic enrollment (or an automatic contribution arrangement) is a plan design feature that automatically enables employers to “enroll” an eligible employee unless the employee elects otherwise. A study from 2021 found that auto-enrollment triples the participation rate of new hires (91% compared to 28% with voluntary enrollment). What’s more, the vast majority of participants increase their deferral rates over time.

Auto-enrollment can be viewed as a win-win for businesses and employees alike. Because of the higher participation rates it inspires among plan participants, auto-enrollment can also help businesses pass annual nondiscrimination testing. As mentioned earlier, adding auto-enrollment to a 401(k) plan also provides an additional $500 tax credit per year up to three years.

What are your fiduciary responsibilities?

As you vet plan providers, it’s also important to consider your own fiduciary duties. 

Retirement plans must follow a complex set of laws and regulations. And to provide savings opportunities, employers must do some heavy lifting to sponsor and administer a 401(k). The Employee Retirement Income Security Act (ERISA) is a federal law that controls retirement plans and includes a set of standards (or “duties”), often referred to as “ERISA fiduciary duties.” 

The primary ERISA fiduciary duty is to run the plan in the interest of participants and beneficiaries. 401(k) plans must have a plan sponsor, a plan administrator, a Named Fiduciary, and a trustee. Below is an admittedly non-comprehensive breakdown of fiduciary responsibilities*:

  • Plan sponsor: From a high level, the sponsor of a 401(k) plan establishes the retirement plan for a business and its employees—and is normally the employer itself (or selected employee of the firm). Some decisions made by a plan sponsor are considered business decisions and are not fiduciary in nature.

  • Plan administrator: ERISA Section 3(16) requires all 401(K) plans to identify the plan administrator in the plan document. This plan administrator oversees the operation of the plan and is responsible for both discretionary (fiduciary) and non-discretionary (day-to-day operational work that follows a set of instructions or procedures) functions. Unless another entity is identified in the plan document, the plan sponsor is the plan administrator. 

  • Named Fiduciary: A qualified plan must have a “Named Fiduciary” who has authority over all fiduciary decisions. The plan’s written document must specifically identify (or outline a procedure to identify) the Named Fiduciary. It’s common for the Named Fiduciary to also be the plan administrator. The Named Fiduciary selects, evaluates, and monitors all other fiduciaries to the plan, as well as any non-fiduciary service providers. They may also delegate responsibilities to trustees or investment managers.

  • Trustee: A qualified plan’s assets must be held in trust by one or more trustees. Trustees must be named in the trust agreement, in the plan’s written document, or appointed by the Named Fiduciary. Trustees have a fiduciary responsibility to ensure plan assets are managed in the best interest of the participants and in line with the plan document.

*For a more detailed overview, please refer to 401(k) plan administrator and sponsor duties.

What’s the difference between a trustee and a custodian?

It’s important to not confuse a custodian with a trustee. A custodian is often hired by the trustee to hold the plan’s assets and handle the buying and selling of investments. While the services of a custodian are documented in a custodial agreement, trustees are generally responsible for their actions. 

For more information on fiduciary responsibilities, please refer to our detailed article about 401(k) plan administrator and sponsor duties.

4. Make your 401(k) plan official

Now that you’ve reviewed your fiduciary responsibilities and selected a plan provider, it’s time to make things official. According to the IRS, establishing a 401(k) plan requires four basic actions:

  1. Adopt a written plan

  2. Arrange a trust fund for plan assets

  3. Hire a recordkeeper or Third Party Administrator

  4. Provide plan information to employees

Let's review how setting up 401(k) for your small business may be easier than you might think with the right provider and information.

Adopt a written plan

Plans must have a written document as the foundation for day-to-day plan operations. Once you determine what type of plan is right for you—and what type of plan design features you want to include—it’s time to begin a plan document. The law requires that certain provisions be included in the plan document.  Most service providers use a pre-approved plan document that contains all the required language and will help you navigate the elections you need to make to complete your plan document. 

Refer to IRS guidance for more information on plan documents

Arrange a trust fund for plan assets

All qualified plans must hold the plan’s assets in a qualified trust. Before you set up a plan, you must determine where you’ll hold your 401(k) plan’s assets.

Hire a recordkeeper or Third Party Administrator

A third-party administrator (TPA) for a 401(k) is a service provider that specializes in day-to-day plan administration. A TPA’s tasks may include: 

  • Preparing and amending plan documents

  • Preparing statements for employers and employees

  • Assisting with plan distributions

  • Ensuring compliance with required annual testing

  • Preparing loan documents

  • Preparing annual reports for the IRS 

Do you need a TPA? For more information, refer to our article on Third Party Administrators (TPA) for 401(k).

Provide plan information to employees

As a final step, businesses are required to notify eligible participants about the specifics of a plan, including benefits and requirements. ERISA requires the plan administrator to provide participants and beneficiaries a Summary Plan Description (SPD), which outlines plan design details for employees, including descriptions of the following information:

  • Name and type of plan

  • Eligibility details

  • Match and vesting schedule details

  • Plan benefit details

  • How to file claims for benefits

  • Rights and responsibilities under ERISA

For more information, click here to learn how to set up a 401(k)

5. Maintaining your plan

Just because a 401(k) plan is up and running doesn’t mean that it’s time to ignore the plan. Keeping a 401(k) plan running smoothly means adhering to ERISA regulations, performing annual compliance testing, meeting year-end deadlines, and more. Below are some basics on preserving your plan.

Government filings: Form 5500  

Form 5500 is a report that businesses must file annually in order to provide the Internal Revenue Service (IRS) and U.S. Department of Labor (DOL) details about the business’ employee benefit plans. It includes details such as the investments, operations, and conditions of the plan. 

ERISA bonds

All plans that are subject to ERISA—including 401(k) plans—need an ERISA bond to protect plan assets from theft or wrongdoing. Anyone who "handles funds or other property" of a 401(k) plan is required to be bonded (unless covered by an ERISA exemption). Bonds can be obtained from a provider ("sureties") approved by the Department of the Treasury. Learn more about ERISA fidelity bonds for 401(k) fiduciaries.

What is 401(k) nondiscrimination testing?

Also known as NDT, 401(k) compliance testing ensures that businesses are compliant with established federal requirements and regulations. These tests help measure participation levels of highly compensated employees (HCEs) and NHCEs to make sure plans are not overly utilized by HCEs. While the tests focus on participation levels, other factors can influence if a business passes or fails the nondiscrimination tests.

Click here to learn more about the basics of 401k compliance.

401(k) deadlines for employers

To get the most from your 401(k) program, you must remember deadlines for important events—including those that affect plan administration and compliance. Refer to our comprehensive list of 401(k) deadlines for employers and employees, which includes action items and links where you can find additional information.

FAQs about setting up a small business 401(k)

How much does a 401(k) cost employers?

Examining 401(k) plan costs for both employers and employees can be a tricky task. Plans can vary drastically from provider to provider and the 401(k) administration fees providers charge aren’t always obvious. It’s important to get a good read on your costs. So, what is the small business cost to manage a 401(k)—and how much does a 401(k) cost employers? Click our guide to find out.

Are there any fees for employees?

The short answer is “yes”—but how much plan participants pay depends on your plan details. According to the U.S. Department of Labor, there are three basic categories of 401(k) fees:

  1. Investment fees: These account for the largest portion of 401(k) fees and often come from the cost of investment-related services levied by the funds in your plan.

  2. Plan administration fees: Charged by the TPA or recordkeeper, these fees cover the costs of managing the day-to-day operations of the plan such as enrollments, distributions and compliance testing.

  3. Transaction fees: These are extra fees charged to the plan sponsor or individual participant. Examples of transaction fees charged to the plan sponsor are amendment fees, deconversion fees and notice distribution fees. Examples of transaction fees charged directly to a participant are distribution fees, loan setup fees, rollover fees and QDRO fees  (splitting an account due to a Qualified Domestic Relations Order).

Human Interest never charges transaction fees to our clients or to plan participants. These fees, especially those that are hidden, can eat away at a saver’s nest egg—and we think it’s unfair for employees to be blindsided by unexpected transaction fees. We also never charge transaction fees to our clients. We want our clients to be empowered to make the best decision for their plan without having to worry about the cost of making plan design changes or even deconverting to another provider.

How do you switch 401(k) plan providers?

Let’s say you decided to offer a 401(k) to round out your benefits package—but after some time, you realize that the service provider you chose may not have been the right fit for your 401(k) plan or your business needs. Luckily, it’s possible to change providers. Before you switch providers, it may be wise to get a free 401(k) benchmark, which can compare your current fee structure, service, and more. 

If you do choose to switch 401(k) providers, you need to undergo a deconversion, a process in which a new provider takes over your plan. It’s important to distinguish between plan deconversion and termination, as the latter could trigger IRS “successor plan” rules that may prevent your business from providing a new plan for one year. 

Click here to learn how to change your 401(k) provider.

Can small businesses offer 401(k)?

Yes! Historically, traditional 401(k) providers designed and priced plans for larger businesses with high employee counts. Many times, this rendered 401(k) plans unattainable for smaller businesses. Not anymore. Today, modern 401(k) providers use technology to automate many manual processes and offload upfront charges that have made traditional plans expensive. In effect, affordable 401(k) plans can be customized to fit the needs of small businesses.

Learn more about small business 401(k) plans by debunking six common myths.

Are you required to offer employees a retirement plan?

No. Offering employees retirement benefits such as a 401(k) plan is not required on a federal level as of 2022. In lieu of federally-backed retirement requirements, however, states and municipalities are taking matters into their own hands. Since 2012, 46 states have either implemented, proposed, or considered legislation to establish state-sponsored retirement savings programs. As of early 2022, 14 states had enacted state-sponsored retirement programs for private-sector workers. Of that number, five states have an active program.

Learn if your state has a required retirement mandate—or if and when your state has upcoming deadlines: What is a state-sponsored retirement plan?

Now is a great time to launch a 401(k) plan

There’s no better time than now to offer a 401(k) plan to your employees. In fact, almost 80% of Americans aren’t saving enough for retirement, and nearly half aren’t saving at all. As one of the biggest challenges facing our country, the retirement savings crisis is rooted in a lack of accessibility. While the primary vehicle for saving for retirement is employer-sponsored plans, one-third of working Americans, including half of small business employees, aren’t offered one.

Affordable, attainable retirement plans can help small businesses provide their employees with a more secure financial future. In fact, the top reason employees begin saving for retirement is because of their employers—and workers are 15 times more likely to save for retirement if their employer offers a payroll deduction savings plan. Human Interest even found that small to medium-sized businesses that offer a 401(k) plan may have lower turnover rates.

What do employers need to know? 401(k) basics for employers

If you’re considering a 401(k) plan for your employees, we’d like to commend you for taking an important first step in helping secure a better financial future for your team. However, if you’ve never offered a 401(k) benefit before—or even if you have and are considering a switch—it’s important to understand 401(k) basics before you decide to move forward. Hopefully, this guide helped coach you through the basics of setting up a small business 401(k) plan.

Choose the right 401(k) provider

Still wanting to compare and contrast 401(k) providers? Our free comparison tool can help you identify questions to ask any provider you’re considering. If you want to begin the process of starting a 401(k), Human Interest is here to help. Click here to get started in minutes.

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