A recent study by Capital One Advisors Spark 401k found that while small businesses are recognizing the importance of 401(k) plans when attracting and keeping employees, the businesses are not using the financial plan as much as expected, according to Employee Benefit Adviser.
The Capital One Advisors survey included 500 small business owners, 94 percent of whom said that offering 401(k) “drove recruitment and retention.” Approximately half (52 percent) of the business owners agreed the plan tends to attract better quality employees, the Spark 401k’s Small Business Retirement Planning Index reported.
Additionally, 27 percent of the respondents who had fewer than 50 employees said offering a 401(k) hinged upon employee demand. That figure has risen by 20 percent since 2013.
Stuart Robertson, the president of Capital One Advisors 401k services, said these figures represent that “misconceptions and myths are preventing many owners from starting a retirement plan.” The firm is dedicated to helping these small businesses and employees find inexpensive retirement savings.
“We want every business owner, including the self-employed, to know that no business is too small for a 401(k), contribution matching is not required, and low-cost plans are available,” Robertson said.
The survey also found that 59 percent of small business owners who do not offer the financial plan have rejected doing so because they believe their business is too small, while 22 percent said they cannot afford matching contributions, and 16 percent said they think plan costs are too high. Additionally, almost half (48 percent) of the small businesses lost employees because they did not offer retirement benefits.
“The common perception’s that small businesses aren’t getting 401(k) plans because they’re complex and costly,” Robertson said. “Actually these bigger misconceptions have been holding small businesses back.”
