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02/26/2025
Posted by: Alex Qian in Informational
Should small businesses offer a 401(k)? Although some business owners might be hesitant to offer a retirement plan, 401(k)s are a critical part of any competitive employee compensation package. To meet hiring and retention goals, employers of all sizes should consider this highly-appreciated perk.
According to the BLS1, 69% of private industry workers had access to employer-provided retirement plans in March 2022 and 75% of those workers chose to participate.
Although some entry-level and low-wage workers may not have access to retirement benefits, most highly-skilled and highly-compensated workers do. In fact, these employees often expect potential employers to offer a retirement plan. They don’t see it as an extra perk but rather as a basic requirement.
When it comes to the talent war, other employers are your competitors. If you’re not offering benefits that are at least as good as what most other employers offer, you’ll have a tough time attracting top talent. A retirement plan and a health plan are the two staples of an employee benefits package.
Retirement benefits don’t just help with recruitment – they also help with employee retention.
A 2025 report from Bartech Staffing2 offers some insights that should be alarming to employers offering subpar benefit packages. Although 51% of workers say they are satisfied with their current position, 71% of workers expect to look for a new role within the next 12 months and 57% plan to do so in the next six months. There are a few reasons for this, but 76% say they want higher pay and 36% say they’re prioritizing benefits.
Your employees may be happy – they may even be thriving in their current positions. This doesn’t mean they’re not thinking about quitting. Although workers want an enjoyable and rewarding job, they’re working for the compensation. If the compensation isn’t good enough, they may not stay – no matter how much they love their job and your company.
Benefits are a critical part of overall compensation – they’re something job seekers tend to give serious consideration. In the 2024 Workplace Wellness Survey from the Employee Benefit Research Institute3, 55% of workers cited retirement savings plans as a top benefit when deciding whether to leave a job.
Even when job seekers say they want a larger salary, they may be tempted by a job that offers less take-home pay but better benefits. This is especially likely to be the case if the numbers work in their favor due to the tax advantages that so many benefits – including 401(k)s – offer.
In addition to making employees feel valued, offering a retirement plan may boost worker engagement and productivity by relieving financial stress and helping workers focus.
In the 2024 Workplace Wellness Survey from the Employee Benefit Research Institute3, 73% of workers said thinking about their financial future makes them stressed and 45% said worrying about their finances distracts them from work. Although workers have many financial concerns (such as being prepared for an emergency, managing debt, and affording caregiving), saving enough for retirement tops the list, with 48% of employees saying this issue personally causes them the most stress.
According to Bankrate4, 57% of Americans are behind on their retirement savings and 48% don’t think they’ll be able to reach their retirement goals. Even among workers earning $100,000 or more a year, 50% are behind on their retirement savings. Offering a retirement plan is a logical way to take care of employees. It helps employees feel valued, thereby contributing to long-term retention and overall employee engagement.
Although there are several retirement plan options available to employers and their workers, 401(k)s are particularly popular. These plans enable employees to contribute a portion of their paychecks on a pre-tax basis, with the savings gaining tax-free investment growth. Employers can add value by matching contributions up to a certain amount. Many employees like 401(k) plans because they offer a convenient, tax-advantaged way to save for retirement.
Despite all the advantages 401(k) plans provide, some employers still don’t offer this benefit. In many cases, this is because employers are worried it will be too complicated. They think about all the work involved in managing investments, structuring plans, and complying with strict fiduciary responsibilities and regulations and decide not to bother.
The good news is offering a 401(k) doesn’t have to be a burden. A small or midsize business can partner with a retirement plan services provider that will handle the heavy lifting.
But be careful – not all retirement plan service providers offer the same level of support. For a partner that will make things easy for you, look for a service provider that is experienced with group benefits, such as Altura Benefits, rather than a personal financial planner. A group provider has the resources to help with everything from plan design and benchmarking to employee education and fiduciary compliance. The more the partner does, the less you have to worry about.
If you’re thinking about adding a 401(k) plan to your employee compensation package, there’s no reason to wait. The sooner you start offering one, the sooner you’ll achieve your recruitment, retention and employee engagement goals.
Did you know that Altura offers retirement planning services in addition to other employee benefits services? Our Altura Financial Advisors team will help you with plan design, employee education, fiduciary compliance, investment analysis, and benchmarking. We will also work with you to understand your business and your 401(k) goals.
Call Tyler Hadley at 801-214-9900 to start a conversation.
Sources 1. https://www.bls.gov/opub/ted/2023/retirement-plans-for-workers-in-private-industry-and-state-and-local-government-in-2022.htm 2. https://cdn.sourceflow.co.uk/t90d6pug8j51hinn0rf41l16149r 3. https://www.ebri.org/docs/default-source/wbs/wws-2024/wws-2024_short-report.pdf?sfvrsn=3a31042f_3 4. https://www.bankrate.com/retirement/retirement-savings-survey/