401(k) Plans for Small Businesses
A small business 401(k) lets the owner and employees save for retirement from each paycheck, pre-tax or Roth, with the option of an employer match or profit-sharing contribution. It is the most flexible retirement plan a small employer can offer, and for many owners it is also the largest tax-advantaged place to put their own savings. Focused Financial Group helps businesses in metro Atlanta set up new plans, review existing ones, and educate employees so the plan is actually used.
How does a 401(k) work for the employer?
The employer chooses a provider (recordkeeper), a plan design and an investment lineup, and signs a plan document. Employees elect how much to defer; the employer sends those deferrals and any match to the provider each payroll. The employer has fiduciary duties to run the plan in the participants' interest, including monitoring fees and investments, and most small plans use a third-party administrator for testing and filings.
What plan design choices matter most?
- Eligibility: when new hires can join (immediately, or after a waiting period).
- Match: whether and how much the employer contributes when employees defer. A safe harbor match simplifies annual testing.
- Vesting: how long employees must stay before employer contributions are theirs.
- Roth option: lets employees pay tax now and withdraw tax-free later.
- Auto-enrollment: new plans are generally required to enroll employees automatically unless they opt out, which raises participation.
- Profit sharing: a discretionary employer contribution that can be designed to favor owners and longer-tenured employees within the rules.
What does a small business 401(k) cost?
Costs usually include a setup fee, an annual administration fee, per-participant fees and investment expenses, plus any employer contributions. Pricing has come down in recent years, and federal tax credits may offset startup and administration costs for eligible small employers in the first years of a new plan. We compare providers on total cost, not just the headline fee.
401(k), SIMPLE IRA or SEP IRA?
A SIMPLE IRA is lower cost and easier to run but has lower contribution limits and a required employer contribution. A SEP IRA is funded only by the employer and suits the self-employed and very small firms. A 401(k) costs more to administer but allows the highest employee deferrals, a Roth option, loans and flexible employer contributions. The right fit depends on headcount, payroll and how much the owner wants to save.
What does employee education involve?
Enrollment meetings when the plan launches and when new hires become eligible, short sessions on how much to save and how to choose investments, and one-on-one meetings for employees who want them. Participation and savings rates rise when someone explains the plan in person.
How Focused Financial Group helps
We help you compare providers and plan designs, coordinate with the recordkeeper and third-party administrator, review the investment lineup and fees with you each year, and run the employee meetings. Retirement plan services are offered through Principal Securities, Inc.
Talk with us
Call 770-250-7588 or use the Contact Us page and tell us your headcount and whether you have a plan today.
This material is for general information only and is not legal or tax advice. Contribution limits, tax credits and plan requirements change; consult your CPA about your situation.