Nearly six million employees at small businesses have gained access to 401(k) plans since 2019, according to an article published by Entrepreneur.com.
By the numbers: Gusto, a payroll and benefits provider that works with smaller employers, estimated in a recent report that 21.2 million employees at firms with two to 99 workers have access to a 401(k) account, up from 15.6 million in 2019. Small businesses employ an estimated 62 million Americans.
The big picture: The expansion is starting to close one of the biggest gaps in the U.S. retirement system, where workers at large corporations long enjoyed access to tax-advantaged savings while many small-business employees did not.
- A key driver of growth is a generous package of federal tax incentives created by the original SECURE (Setting Every Community Up for Retirement Enhancement) Act.
- For example, for employers with up to 50 workers, SECURE 2.0 covers 100 percent of 401(k) startup costs through tax credits, up to $5,000 per year for the first three years. That effectively allows many small firms to launch a plan with little to no net out‑of‑pocket administrative expenses.
