How Small Businesses Can Benefit from Offering a 401(k) Plan

For many small business owners, retirement planning tends to focus on their own future—but what about creating retirement opportunities for employees? Offering a small business 401(k) plan not only helps you secure your own financial future but also attracts and retains valuable talent in an increasingly competitive job market.

The good news? Modern 401(k) plans are more accessible and affordable than ever, even for businesses with just a handful of employees.

Why Consider a 401(k) Plan for Your Small Business?

1. Attract and Retain Top Talent

   Employees expect more than just a paycheck—they’re looking for long-term benefits and financial security. A 401(k) plan signals that your business is invested in their future, making it easier to hire and keep top performers.

   
   

2. Personal Retirement Savings for Business Owners

   A small business 401(k) isn’t just for employees. As a business owner, you can leverage these plans to make significant contributions toward your own retirement savings while benefiting from tax advantages.

   
   

3. Tax Benefits for the Business

   • Employer contributions are typically tax-deductible.

   • You may qualify for the SECURE Act tax credit—up to $5,000 per year for three years to help offset plan startup costs.

   • Additional credits are available if you add automatic enrollment features.

   • "IRS retirement plan startup cost tax credit"

     
     

4. Flexible Plan Design

   Today’s small business 401(k) solutions allow for customization:

   • Safe Harbor Plans: Automatically satisfy IRS nondiscrimination testing, ideal for businesses where owners or highly compensated employees want to maximize contributions.

   • Profit Sharing: Add flexibility with employer contributions based on profitability.

   • Roth 401(k) Option: Allow after-tax contributions for employees who prefer tax-free growth.

     
     

Common Misconceptions

• “It’s Too Expensive”: Many providers now offer low-cost, easy-to-administer plans designed specifically for small businesses. Costs can be further offset by available tax credits.

  
  

• “It’s Too Complicated”: Third-party administrators and financial advisors can handle most of the heavy lifting, from plan design to compliance.

  
  

• “We’re Too Small”: Businesses with as few as one employee—including sole proprietors—can set up 401(k) plans.

  
  

How to Get Started

1. Determine Your Goals

   Are you primarily focused on your own retirement savings, enhancing employee benefits, or both? Your objectives will guide the type of plan that’s best for your business.

   
   

2. Consult a Financial Professional

   Work with a financial advisor who can help you navigate plan options, tax strategies, and regulatory requirements to design a plan that fits your needs.

   
   

3. Evaluate Providers

   Look for 401(k) platforms that specialize in small businesses and offer low administrative costs, user-friendly online portals, and fiduciary support.

   
   

4. Communicate the Benefits to Employees

   A retirement plan only adds value if your team understands and uses it. Provide education and ongoing support to help employees make the most of the benefit.

   
   

Final Thoughts

Offering a 401(k) plan isn’t just about compliance or checking a box—it’s a strategic investment in the future of your business and your team. With the right plan in place, you can enjoy tax advantages, strengthen employee loyalty, and build toward your own financial freedom.

If you’re interested in exploring small business retirement plans, our team at Rigden Capital Strategies can help you navigate the options and design a plan that fits your goals. Schedule a Consultation to learn more.

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Rigden Capital Strategies was born out of a simple but powerful idea: financial advice should be personal, transparent, and built around your goals—not generic solutions or product-driven sales. Fueled by decades of experience and a desire to see clients truly succeed, we’ve created a process rooted in value, integrity, and progress.

As a fee-only fiduciary, we offer dynamic, stress-tested wealth plans tailored to your life. Our expertise spans investment management, retirement and tax planning, and estate guidance—blending active and passive strategies to help your portfolio through any market. We believe in real relationships, clear strategies, and long-term results.

Your goals, our strategies. Together, let’s make your goals happen.

Disclosure: This content is for informational and educational purposes only and should not be interpreted as financial, legal, or tax advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information provided. Investment decisions should be based on individual circumstances, and we recommend consulting a qualified professional before implementing any financial, legal, or tax strategies. Past performance is not indicative of future results, and all investments carry risks, including potential loss of principal. No investment strategy can guarantee success or protect against loss in all market conditions. Investors should carefully consider their risk tolerance, investment objectives, and financial circumstances before making investment decisions.