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SURVEY: SMALL BUSINESS OWNERS STILL RESISTANT TO STARTING A 401(k) PLAN, ONLY ONE IN FOUR CURRENTLY OFFER AS AN EMPLOYEE BENEFIT

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Long-Standing Misperceptions About Access, Matching, and Cost Remain Top Barriers to Adoption

SEATTLE, May 10, 2022 /PRNewswire/ — At a time when many companies are boosting 401(k) benefits to attract and retain employees in a tight labor market, 74 percent of small businesses are still going without any plan at all. Key findings in new research commissioned by ShareBuilder 401k show that owners believe their business is too small and that 401(k)s are too costly.

The survey, that polled 500 small business owners (SBOs) from across the country, reveals that only 26 percent currently offer a 401(k) plan. Responders cited three main reasons for not starting a plan:

  • 58 percent believe their business is too small to qualify for one
  • 32 percent say they can’t afford a match
  • 24 percent believe they are too expensive to set up and manage
  • “The truth is that any business, regardless of size—and including the self-employed—can offer a 401(k) plan. There are very affordable, low-cost options, and matching is not required,” said Stuart Robertson, President and CEO of ShareBuilder 401k. “This new survey data indicates that, as a society and industry, we have to do a better job of educating the market and de-bunking misperceptions.”

    Among the small businesses with a plan, the top reasons they started a 401(k) provided some positive insights. The findings are as follows:

    • 71 percent said they felt a personal responsibility as a business owner to provide one
    • 47 percent said they thought it helped their business attract and retain employees
    • 26 percent wanted to receive the tax benefits of a 401(k)
    • 21 percent wanted to save for their own retirement

    However, the survey found that many other misperceptions still seem to be prevalent. Among the most problematic was the belief that 10 percent in investment expenses is a fair amount.

    “Investing can feel intimidating or opaque, and it’s important for employers and employees to know to try keep all-in in investment expenses under 1 percent—this includes fund expenses and investment management,” said Stuart Robertson. “The difference of paying 1 percent more in investment expenses over a 40-year career can result in a nest egg that is hundreds of thousands of dollars less which can truly impact your retirement. Every dollar spent on expenses is one less dollar invested in the markets.”

    Survey Methodology
    The ShareBuilder 401k survey was conducted by Wakefield Research between March 25 and March 31, 2022, using an email invitation and online survey. In total, 500 U.S. small business owners with 1-50 employees participated. More information on Wakefield can be viewed online at www.wakefieldresearch.com

    About ShareBuilder 401k
    ShareBuilder 401k is a leading digital 401(k) provider specializing in low-cost, all-ETF retirement products and resources for small- to mid-sized companies, including owner-only businesses. Founded in 2005 and now serving more than 6500 businesses across the US, ShareBuilder 401k is a pioneer of the index-based 401(k), digital quoting and purchasing of retirement plans, and providing investment management (ERISA 3(38)) services for every client’s fund roster. ShareBuilder 401k is committed to further expanding access to retirement plans and leading more Americans to save through cutting-edge technology, low costs and quality education and support. More information on the company can be viewed online at www.sharebuilder401k.com

    FOR MORE INFORMATION:Cindy Carrasquilla, cindy@haddadandpartners.com, 646.645.9056

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    SOURCE ShareBuilder 401k