ShareBuilder 401K announced it is waiving all setup costs for mid and small business 401(k) plans now through December 23.
The move could save businesses with more than one employee up to $750 on initial setup costs, according to the announcement.
“The key for all Americans to build financial security in retirement is contributing consistently to a tax advantaged account. However, many small businesses are missing out on creating a strong retirement plan for themselves and their employees simply because they don’t think they are big enough to qualify for one or think 401(k) benefits are expensive,” said Stuart Robertson, CEO of ShareBuilder 401K, in a statement. “At ShareBuilder 401k, we want any business, no matter its size, to be able to launch a very affordable retirement plan for themselves and their team – something they can actually install over their lunch hour – helping them build towards a secure retirement while benefiting from tax deductions.”
Research shows that small employers are not as likely to offer retirement plans compared to larger businesses due to the costs in administering retirement savings features. A 2024 study from the Employee Benefit Research Institute (EBRI) and the Center for Retirement Research (CRR) at Boston College found that of small businesses who do not offer a plan, many chose not to due to costs and lack of profitability.
Twenty-six percent of businesses also thought they were “too new” or “two small” to offer a plan, according to those findings.
Tax credits under SECURE 2.0 legislation have made it more affordable for businesses to provide plans, but research from EBRI and the CRR at Boston College show that many who don’t offer a plan remain unaware of the legislation’s tax incentives. According to those findings, 72% of small business owners who forgo on offering a plan said they were not aware of tax credits up to $5,000 being available to cover initiation costs.
However, 78% of those respondents said the tax credits would make it “at least somewhat more” attractive to offer a plan, EBRI and the CRR at Boston College reported.
In an independent study sponsored by ShareBuilder 401K, the firm found that when combined with credits and other provisions under SECURE 2.0, offering a 401(k) plan could be cost-neutral for a plan’s first three years.