Three-quarters of small business owners believe that so many Americans are financially unprepared for retirement that the problem has reached the level of a crisis, but only about a fifth of them actually offer their employees a 401(k) or similar plan, according to a new survey.
The survey of 501 small business owners, by
Few small businesses provide their employees access to an employer-sponsored 401(k) plan because many of them first need to reach a point of business maturity or critical mass before they can absorb the cost and administration of a 401(k) retirement plan.
Only 11% of the small business owners surveyed said they are likely to add an employee-sponsored 401(k) plan within the next two years. Sixty-nine percent said their business was too small and more than half said such a plan would be too expensive.
Nevertheless, small business owners indicated they would like to offer a retirement plan, and their employees certainly want one too. Thirty-seven percent of the small business owners with more than six employees who responded to the survey said they are under pressure from employees to offer a retirement plan. Four in five (78%) of the owners surveyed said that having a retirement plan was also effective in helping them attract qualified employees.
Nationwide is backing legislation that has been introduced in
“Our survey found that nearly half (46%) of small business owners were not aware or were unsure that an employee self-funded retirement plan could be offered without having to match employee contributions,” said
According to the survey, 71% of the small business owners said that when selecting an employee self-funded retirement savings plan, it was important that the plan have the flexibility to match or not match employee contributions, while 62% said it was important that multiple employers would group together to pool resources and reduce administration costs.
Four in five owners said that when selecting a plan, it was important for the plan to have a minimal amount of administration requirements so that it could be offered at a low price. Three in four owners said it was important, as their business grew, for the plan to be able to be converted to better meet their needs.
— This article first appeared on Accounting Today.
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