Small Business Retirement Plan Options

For growing businesses, ensuring the long-term well-being of your employees is not just a gesture —it’s a strategic imperative. Retirement plans for employees of small business enterprises serve as powerful instruments, enabling employees to allot a fraction of their earnings for their golden years. Here’s why introducing small business retirement plans can be a game-changer for your enterprise:

Attract and Retain Talented Employees

In today’s competitive job market, a comprehensive financial services package is essential for attracting and retaining top talent. Workers frequently weigh the availability of retirement plans small business owners can offer, like the 401(k), when considering job offers or deciding to stay with a company. Offering robust small business retirement plan options conveys that your business prioritizes its long-term success. Doing so bolsters your company’s reputation as a caring employer, which can markedly boost employee loyalty and motivation.

Integrate Payroll

Blending a retirement plan with your small business can dovetail perfectly with your payroll system. This congruence streamlines processes, auto-deducting contributions and ensuring their accurate allocation. Integration spares small business owner retirement plans from tedious manual entries, curtailing mistakes and conserving administrative time.

Automate Your Plan Administration

Leverage technology to automate your retirement plan options for small businesses’ administration, ensuring precision and efficiency. This technological embrace supervises contributions, checks compliance, reporting, and more with minimal manual oversight for small business retirement plans. Companies that provide this service guarantee that plans adhere to regulations seamlessly and ensure participant security.

Tax Advantages for Business Owners

Businesses can gain appreciably from tax credits by initiating a 401(k) plan. The SECURE Act, instituted in December 2019, amplifies tax credits for companies launching a new 401(k) plan, with small business retirement plan options potentially receiving a startup credit of up to $5,000. Additionally, when you compare small business retirement plans, companies can claim another tax break of $500 for three years by adding an automatic contribution feature. Beyond credits, matching or profit-sharing contributions made by employers to 401(k) accounts can qualify as business expenses, rendering them tax deductible and further reducing the company’s tax liability.

Increase Company Deductions

Businesses gain tax deductions for their contributions to employee retirement plans. This can lead to substantial savings, enabling companies to channel those funds into business operations or other strategic endeavors, ensuring a steady income.

Boost Employee Productivity and Morale

A financially secure employee is often a more focused, enthusiastic, and productive one. Knowing their retirement is secure, employees can zero in on their roles, enhancing company output and fostering a friendly work atmosphere.

Competitive Edge in Recruitment

Differing types of retirement plans for small business endeavors can be the distinguishing factor when talented candidates choose between job offers. This retirement benefit is a testament to your commitment to their future, making your establishment a preferred workplace. Providing small business retirement plans will also elevate your company profile with future employees, reinforcing your status as a desired employer.

Personal Retirement Security for Business Owners

A 401(k) isn’t just an employee benefit for business owners—it’s a personal retirement safety net. By investing, you secure your retirement, ensuring your entrepreneurial endeavors reward you in your later years.

Mitigate Employee Turnover

Constant staff turnover is costly and destabilizing. Introducing a 401(k) with vesting periods incentivizes employees to commit long-term, preserving institutional knowledge and fostering a seasoned workforce.

Flexibility in Contribution Structures

401(k) plans grant employers the discretion in deciding contribution amounts for individuals. Whether it’s a matching system or discretionary contributions, you can curate a plan congruent with your main business’s fiscal health and goals.

Retirement plans for small businesses can be easy to administer and maintain. Once the plan is set up, the primary responsibilities of the business owner are depositing plan contributions and providing plan notices to employees.

Retirement plans also offer tax benefits to the business, including the ability to deduct contributions, and for certain eligible employers, take a tax credit up to $5,000 per year for three years. A retirement plan also provides tax benefits to those who participate in the plan. Contributions and investment earnings are not taxed until taken out of the plan.

A 401(k) plan can also allow after-tax Roth contributions, which will be taxable to you when you contribute them to your plan account but are tax-free if not withdrawn until you retire. Savers credits are also available for those who qualify.

2024 401(k) Contribution Limits

One of the most important benefits of a 401(k) is the large amount that can be contributed each year, tax-free.

Maximum employee elective contribution (age 49 and younger)


Maximum employee elective contribution (age 50 and older)

Additional $7,500

Maximum employee elective deferral plus catch-up contribution (age 50 or older)


Defined contribution maximum limit, employee + employer (age 49 or younger)


Defined contribution maximum limit (age 50 or older), all sources + catch-up


Highly compensated employees’ threshold for nondiscrimination testing


Key employee officer compensation threshold


Annual compensation limit for HCEs and key employees