The 401(k) plan is a favorite retirement savings vehicle for Americans, but less than half of America’s small business owners offer this type of benefit.1 Owners of small businesses may incorrectly assume that 401(k) plans just won’t work for them. Here’s the reality.

Retirement benefits are becoming increasingly important to employees. Two-thirds (68%) of workers said a retirement plan was a critical factor in deciding whether or not to accept a job, while 62% said a plan was a critical factor in staying with a job. In short, a 401(k) plan can be a powerful tool for employers to attract and retain employee talent.

Business owners sometimes hope to fund their own retirement through business profits or the future sale of their business. They may sacrifice personal retirement savings in favor of putting money back into the business. When the company provides a 401(k) plan for employees, owners may be more likely to also contribute on their own behalf. The savings in the plan can help protect the business owner’s ability to retire, even if the company itself does not survive.

Businesses with fewer than 100 employees may be able to claim a tax credit to offset the cost of setting up and administering a 401(k) plan. The SECURE Act increased tax credits for smaller employers who start new retirement plans. The credit jumped from $500 per year to as much as $5,000 per year for three years, starting with plan years beginning after Dec. 1, 2019. Small employers who add an automatic enrollment feature to their plan may be eligible for an additional $500 tax credit per year for each of the first three years that automatic enrollment is effective, for plan years beginning after Dec. 1, 2019.

401(k) plans are available by virtue of the extremely complex U.S. tax system. It makes sense to feel a little intimidated, especially when you have a business to run. Today, there is a lot of help available to make it possible for even the smallest business to confidently establish and operate a 401(k) plan. The administration can be fully automated, and you can select a financial professional who specializes in these plans to help make sure they benefit employees and the company, within the bounds of all applicable laws.

A workplace 401(k) plan may provide an opportunity for employees to connect with a financial professional; for many, this is their only such contact. Along with the plan, contact with a financial professional may help employees gain confidence in their ability to retire. That is important for at least two reasons: 1) Employees who know they will have enough money to retire are more likely to leave the workforce at their desired retirement age. 2) Employees who are worried about finances are often less productive, less healthy and more expensive for your other benefits.

If you haven’t established a 401(k) plan, take some time to learn more about the ways it may help you grow your business and protect your future — and your employees. Your retirement plan advisor would be happy to share more insights.