5 Myths About Small Business 401(k)s


401(k)s are one of the most popular retirement savings plans for small businesses, but unfortunately, there are a lot of myths about them. If you’re a small business owner, don’t be discouraged by these myths. 401(k) plans can be an excellent way for businesses of any size to attract and retain employees, and they don’t have to be expensive, complicated, or time-consuming. 

Myth #1: You must be a big company to offer a 401(k).

Contrary to popular belief, you do not have to be a large company to offer your employees a 401(k) plan. 

In fact, with the rise of tech-enabled 401(k) plans and automated solutions, 401(k)s have become more accessible than ever before. This allows companies of any size to offer their employees a 401(k) solution, even those with just one employee. And having the ability to put away money for retirement is one of the most powerful components of financial security, so giving your employees access to a 401(k) plan can be a major win. 

Offering a 401(k) plan is an excellent way for companies of any size to start protecting their employees’ futures and ensure everyone achieves their desired level of financial success.

Myth #2: Offering a 401(k) is too expensive.

This myth exists for a good reason because many 401(k) plans used to be too expensive, and some plans still are.

But, with new streamlined 401(k) solutions that let you set up in minutes, automate paperwork, and leverage tech-enabled features, the cost is no longer a barrier for many small businesses. Tech-enabled apps and programs make setting up a 401(k) simpler and more efficient, allowing employers access to retirement plans with low-cost fees. Automation plays a big part in keeping costs down, providing an effortless way to manage these plans. 

With the addition of cost-saving technology, employers can now offer 401(k) plans without breaking the bank.

So don’t assume that offering a 401(k) plan is too expensive for your small business—there are many affordable options. 

Myth #3: Setting up a 401(k) is complicated and time-consuming.

Setting up a 401(k) can seem overwhelming and confusing, but there’s no reason to let it keep you from offering such a valuable benefit. 

These days, many 401(k) providers offer automated assistance online, providing fast and streamlined solutions for businesses of all sizes. With the help of these resources, you’ll be ready to start saving sooner than you think—taking a big step closer to a comfortable retirement for you and your employees. 

And while the setup time will range by provider, at 401GO, we offer a fast setup that takes most small business owners as little as 15 minutes. On top of that, most of our small business clients can spend just 10 minutes per year taking care of their 401(k) plan on an ongoing basis. 

Myth #4: Investment management is too complicated for small businesses.

Investment management can be a daunting task, especially for small business owners that don’t have experience selecting investment options.

Fortunately, outsourcing this task to experienced professionals is a cost-effective way to keep your investments strategically diversified and low-cost. By entrusting the expertise of an external financial consultant, you can seek advice on how to invest or manage your current strategies with minimal effort or risk. Investment management doesn’t have to be complicated; outsourcing is a viable solution that allows small businesses to maximize returns without overextending their resources.

At 401GO, we provide each plan participant with a guided portfolio builder to help them understand and select the appropriate investments for their situation. That means we will never shove employees into pre-built investment boxes but will guide them through building a customized portfolio to meet their unique needs.

Myth # 5: Small businesses can’t afford to offer matching contributions like larger companies.

When it comes to matching contributions, there are a couple of critical details to understand:

  1. First, just because you offer a 401(k) plan does not mean you have to offer a company match. Matching can be optional depending on the type of 401(k) plan you select.
  1. Second, if you do choose to offer a match, all matching contributions are deductible as a business expense, one of the many ways a 401(k) can help reduce your taxes. This can be an excellent way for owners to save money in taxes yearly while offering a valuable saving incentive for their employees.  

So, if you decide to offer a company match, remember: offering matching contributions is an affordable and effective way for small businesses to show their appreciation and care for the hard work put in by their employees. In addition, providing a company match is an excellent incentive that encourages employee engagement while helping to improve employee retention. Lastly, offering a company match demonstrates how small businesses value their staff just as much as larger companies do.

In the end, many small business owners mistakenly believe that 401(k) plans are too expensive or complicated to set up. However, plenty of affordable and straightforward options are available to small business owners. 

And don’t let the complexity of the process deter you—you can have a plan set up in as little as 15 minutes by selecting a tech-enabled provider like 401GO. And whether or not you decide to offer a company match, your employees will appreciate the value of having access to a 401(k) plan to secure their future retirement needs.

Remember, a small business 401(k) is a valuable addition to any workplace that can attract and retain top talent and provide peace of mind for years to come.

401GO stands out from the crowd.

At 401GO, we provide small business 401(k) plans powered by an easy-to-use platform. Our streamlined approach allows you to get up and running in just minutes with simple and affordable pricing to fit your unique business.

Want to know more? Contact us and we’ll answer all your questions.

Learn more about our 401(k) options optimized for small and medium sized businesses.


Dillon Hunt
Dillon is a Senior Plan Consultant and hobby farmer. He enjoys financial topics and helping clients achieve their financial goals.

Learn more about our 401(k) options optimized for small and medium sized businesses.