Small Business 401k Plans Explained

Your Complete Guide to 401(k) Plans for Small Businesses

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What is a small business 401(k) plan?

401(k) retirement savings plans aren’t exclusive to large corporations; they can be a game-changer for small businesses too. With Ubiquity Retirement + Savings, you can secure a promising future for both your business and its team.

A small business 401(k) isn’t just about financial protection—it’s about building something that lasts. Each pre-tax contribution has the potential to decrease your annual tax burden while also setting the stage for future compounded growth.

Choosing this route means you’re not only prepping for retirement but also creating a more stable and promising future for all stakeholders.

How does a small business 401(k) work?

With a small business 401(k), you (and your employees, if you have them) can save for retirement while lowering your taxable income. Contributions you and your employees make to a 401(k) plan are contributed on a pre-tax basis. In the short term, that translates to a smaller tax bite on your annual salary. In the long run, it means extra security as your investments grow tax-free until you’re ready to retire.

Thinking about starting a retirement plan for yourself or your small company? Read on to get the facts from this complete guide to 401(k) plans for small business

Why adopt a 401(k) plan for your small business?

Attract and Retain Top Talent: In today’s competitive job market, offering a small business 401(k) plan can set your business apart. Quality employees often see retirement benefits as a crucial part of their compensation. By providing a 401(k), you position your business to bring in and hold onto the best in the field who value long-term financial stability.

Tax Advantages for Both You and Your Employees: Your business can enjoy significant tax deductions from contributions made to your small business 401(k) plan. For your employees, their contributions are made pre-tax, which means they can lower their taxable income now. Additionally, the funds invested grow tax-free until they decide to withdraw.

Secure Your Own Retirement Future: Beyond the benefits for your team, a 401(k) plan offers you, the business owner, a structured way to plan for your retirement. Considering how often you might reinvest profits back into the business, a 401(k) ensures you don’t neglect your personal financial future.

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Answer a few simple questions to find the optimal plan for you and your small business.

How many employees do you have?
I am a sole proprietor
(just me/or my business partner/spouse)

Or schedule a free consultation with a retirement specialist.

Why save with a 401(k) plan instead of an IRA?

Opting for a small business 401(k) offers higher contribution limits and the potential for employer matching, amplifying your retirement savings potential.

Setup & Management

  • IRA: Requires individual setup and management.
  • 401(k): Established by employers, including owner-only businesses.

Contribution Limits (for 2024)

  • IRA: Max contribution of $7,000, with an additional $1,000 catch-up for those 50 or older.
  • 401(k): Max contribution of $23,000, with an added $7,500 catch-up for individuals 50 or older.

Employer Contributions

  • 401(k) plans allow employers to contribute up to 25% of an employee’s compensation towards retirement savings.


  • It’s possible to contribute to both a 401(k) and an IRA (specific rules apply).
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Small Business 401(k) Plan Types

If you’re trying to learn about 401(k) plans, you may feel overwhelmed by all the information and terms out there. Rest easy; it’s a lot less complicated than it seems. Here are the different types you might have heard about:

Traditional small business 401(k)

A small business 401(k) plan is basically the same as a large business 401(k): a plan that lets you take money from your pay (before paying taxes on it) to save for your retirement. No matter the size of the business, a 401(k) plan has the same benefits and the same maximum contributions. The difference is that retirement plans big businesses get complicated—and expensive.

Big business 401(k) plans are designed for businesses with hundreds or thousands of employees. Because they are more complex, they often require in-person enrollment meetings and special human resources training. Most 401(k) plans for large businesses also have high fees—including assets under management, or AUM fees. AUM fees are charged based on a percentage of the money in your account. That means that the more you save, the higher the fees.

The Ubiquity 401(k) plans detailed below are all small business 401(k) plans. They’re designed for small businesses and individuals who don’t have lots of time and budget to devote to managing a retirement plan. We eliminate all the jargon and offer straightforward, transparent monthly fees—and zero AUM fees—so you can jump in and start saving in minutes while contributing more towards your bottom line.

Roth 401(k)

The Roth 401(k) bridges the traditional 401(k) and Roth IRA’s best features, offering a dynamic retirement savings option for small business owners and their employees. Unlike the pre-tax contributions in a traditional 401(k), contributions to a Roth 401(k) are made with after-tax dollars. This means that while you forgo immediate tax deductions, you enjoy the perk of tax-free withdrawals during retirement – encompassing both your initial investments and the accumulated earnings. For this benefit, the account needs to be in place for at least 5 years, and distributions should commence when the account holder is 59½ or older, or in the case of disability or passing. Given the unpredictability of future tax landscapes, the Roth 401(k) offers a strategic hedge, positioning you and your employees for a financially sound retirement.

Safe Harbor 401(k)

The fairness principle is at the core of 401(k) plans – they must cater to everyone equitably, not just the higher-tier earners. However, sometimes, plans might not meet the annual fairness checks. That’s where the Safe Harbor 401(k) steps in. By selecting this structure, the business owner commits to specific contributions that vest to the employee immediately. This arrangement not only ensures fairness but allows high-earning individuals to contribute more to their 401(k), unrestricted by the contributions of their lower-earning peers. It’s an inclusive approach ensuring everyone maximizes their retirement savings potential.

New Comparability 401(k)

Standard profit-sharing has its advantages, but what if a business owner wishes to reward certain groups more? The New Comparability plan shines in this aspect. It allows owners to be generous with specific demographics, like seasoned or top-earning team members, without violating non-discrimination rules. For many small businesses, this design proves invaluable. It’s an avenue to appreciate and incentivize key players, all while providing a robust retirement framework for the entire team.

Sole Proprietor Plan

Tailored for the self-employed individual, the sole proprietor 401(k) — a.k.a solo(k) —  stands out in the realm of retirement savings. By donning both the employer and employee hats, one can channel more funds into retirement savings. It’s a unique arrangement, unclouded by corporate intricacies or the need for extensive consultations. With a transparent fee structure and the absence of concealed costs, it’s an attractive retirement route for those steering the ship alone.

“I am a new plan sponsor for my employer with Ubiquity. The friendliness of customer support was outstanding. So far, I am very impressed with Ubiquity! ”

- Alan Drage, Great Basin Scientific

What are the best 401(k) plans for my company?

No matter the type or size of your small business, whether you’re a sole proprietor or have dozens of employees, Ubiquity can help you save.

“Great customer service and 401(k) option for small businesses.”

- Jill A.

Group 401(k) Plans

For small businesses with 1-100 employees


What it is: A budget-friendly retirement solution, tailored by experts for small business owners.

Who it’s for: Small businesses with 1-50 employees that want to get a plan in place quickly and keep administration as simple as possible.

How much can I save? Contribute up to the 401(k) maximum—up to $23,000 for 2024 ($30,500 if you’re age 50 or older).

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What it is: Customizable savings for small businesses. Get a fully optimized 401(k) retirement savings plan tailored just for your needs.

Who it’s for: Small businesses with 1-100+ employees who want a plan personalized to their needs.

How much can I save? Contribute up to the 401(k) maximum—up to $23,000 for 2024 ($30,500 if you’re age 50 or older).

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What it is: All inclusive, customizable savings for small businesses. Get the white glove treatment with a 401(k) retirement savings plan designed for you, with extras included.

Who it’s for: Small businesses with 1-100+ employees who want to maximize their tax savings.

How much can I save? Contribute up to the 401(k) maximum—up to $23,000 for 2024 ($30,500 if you’re age 50 or older).

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Sole Proprietor 401(k) Plans

For businesses with no full-time employees except the owner/spouse/partner (up to 2 total).

Single(k) Plans

What it is: Smart savings for solo business owners. Get a big business 401(k) plan even as a one-person operation.

Who it’s for: Sole proprietors and businesses with no full-time employees.

How much can I save? Contribute up to the 401(k) maximum—up to $23,000 for 2024 ($30,500 if you’re age 50 or older) plus optional employer contribution up to $43,500.

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Single(k) Plus Plans

What it is: A record-kept 401(k) plan tailored for solo business owners. Benefit from the features of a standard 401(k) plan and leave the paperwork to us.

Who it’s for: Designed specifically for sole proprietors and businesses without any full-time employees.

How much can I save? For 2024, you can contribute up to $23,000, and if you’re 50 or older, this limit increases to $30,500. Additionally, there’s an option for an employer contribution of up to $46,000.

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© 2024 Ubiquity Retirement + Savings
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San Francisco, CA 94104

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Talk to Sales
Schedule a Free Consultation

Contact Support
Visit our Help Center
6am–5pm PT / 9am–8pm ET

© 2024 Ubiquity Retirement + Savings
44 Montgomery Street, Suite 300
San Francisco, CA 94104