How Offering a Retirement Plan Can Help You Grow Your Business

Reallocating funds: Start-up tax credits for eligible businesses and tax-deductible employer contributions mean savings you can put towards growing your business.

Recruiting and retention: A retirement plan option makes your business more attractive to top talent and helps reduce costly employee turnover.

Increasing productivity: Giving your employees a way to save for the future makes them feel valued, which can boost morale and foster loyalty to your company.

When it comes to growing a small business, most owners focus on strategies like attracting customers, expanding offerings, and improving day‑to‑day operations. But one strategy you might not immediately think about is offering a retirement savings option, like a 401(k) plan, to attract top talent and keep employees motivated.

If you’re evaluating whether starting a retirement plan makes sense for your business, it’s worth understanding how this benefit can support growth—not just employee savings.

Small business tax credits for offering a retirement plan

Implementing an employer-sponsored retirement plan like a 401(k) can earn the business a tax credit of up to $5,000 for the first three years of a plan to help cover administrative expenses. Additionally, employer contributions are tax-deductible and assets in the plan grow tax-free. All of this makes it more affordable to start a retirement plan, and you can use those savings towards things like marketing, inventory, and equipment to help expand your business.

For many small businesses starting a retirement plan for the first time, these incentives can significantly lower the upfront cost and make offering a plan more accessible than expected.

Can a retirement plan help small businesses hire and keep employees?

Many employees today expect the opportunity to save for retirement in an employer-sponsored plan. Finding qualified applicants for open positions can be challenging, and offering a retirement benefit to applicants can mean the difference between welcoming a new employee and continuing your search.

Retirement plans are a key deciding factor—along with salary, time off, and health insurance—for many job hunters, and you don’t want to close the door on the perfect candidate just because your company is missing a critical employee benefit. More and more business owners are learning that to attract and retain top talent, they’ll have to sponsor a stellar retirement plan.

In practical terms, offering a retirement plan can shorten hiring timelines, reduce recruiting costs, and help employers compete with larger organizations offering similar benefits.

How retirement plans support employee productivity and retention

Productivity is also a factor. A recent study found that nearly one in three employees have let personal finance issues be a distraction at work. What’s more, 56% of those who are distracted by finances at work report spending three or more hours per week thinking about or dealing with the issues.¹ And it doesn’t end there.

Employees who report feeling financially stressed are twice as likely to look for a new job, and almost 75% would be attracted to another employer who seems to care more about their financial wellbeing.¹ So clearly, financially insecure employees aren’t just a hazard to themselves, they’re a hazard to the business, too.

As a business owner, you have the unique ability to help combat this issue. By making employees feel secure and valued, you can help them focus on their job rather than financial concerns—and make a meaningful difference in their retirement outcomes at the same time.

For employers, reduced financial stress among employees can translate into fewer distractions, lower turnover, and more consistent performance across teams.

How to start a small business retirement plan

Becoming a retirement plan sponsor might be easier than you think. The government wants to help businesses make retirement plans available to people, so regulations continue to make the process easier and more straightforward. Today’s retirement plans are designed to scale, making them accessible for businesses of all sizes—including those with just a handful of employees.

Plus, a retirement plan is one of the most powerful and rewarding benefits you can offer employees. Not only are you showing them you care about their financial wellbeing and future, but you’re setting your business up for success as well.

Ready to get started?

From tax advantages to stronger recruiting and improved employee focus, offering a retirement plan can be a meaningful investment in both your people and your business’s long‑term growth. We offer retirement plans of all sizes to give you the freedom to design a plan that fits the unique needs of your business and your employees.

Learn more about retirement plan options available to you, or contact one of our retirement plan representatives at 800-345-6363.