It’s a two way street for employers wanting to attract and retain employees. A new survey from Ubiquity Retirement + Savings says that 94% of employers know the value of offering a 401(k) plan but, still, only 30% are prepared for the rules (SECURE 2.0) and regulations that govern them.
“These results reflect what we hear every day from small business owners. We’re seeing many who want to upgrade their plans or are starting from scratch,” said Hunter Claxton, SVP of Strategy at Ubiquity Retirement + Savings. “With new state and federal changes looming, the next year will serve as the perfect opportunity to get ahead, and that’s where we come in.”
Despite the uncertainty, many employers are already taking action. About 38% of businesses say they have taken steps in the past 12 months to strengthen retirement benefits, including increasing employer contributions, expanding eligibility, or improving employee education and communication.
Among those planning changes in the next year, 24% intend to expand benefits or eligibility and 17% plan to adopt a new plan, while another 24% do not plan to take any action. At the same time, only 53% of employers know whether their state currently requires participation in either a state-run IRA or a private 401(k) program, and 47% say they are unsure.
The survey also found that tax incentives, simplicity, and employee retention remain the biggest factors driving new plan adoption. Therefore, when plans are easier to set up and the financial benefits are clear, small employers are quick to act.
Recent changes under SECURE 2.0 have expanded federal tax credits available to small businesses that start a retirement plan, including credits that can cover up to 100% of eligible start-up costs for employers with 50 or fewer employees, and additional credits tied to employer contributions. These incentives can significantly reduce, and in some cases effectively eliminate the initial cost of launching a plan.
“Policy has actually tilted in favor of small businesses,” Claxton added. “Between SECURE 2.0 tax credits and simplified plan designs, it has never been more affordable or more realistic for a 10 or 20 person company to offer a high-quality 401(k).
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