Small firms boost 401(k) offerings, widening benefits for workers

Nich Tremper, senior economist at payroll platform Gusto, noted that more than 5 million extra workers at small firms can now join retirement plans versus 2019, with traditionally low-coverage industries adding offerings. Hospitality coverage climbed from 4% to 12% between 2019 and 2026, and public administration, professional services and finance show the highest overall shares. Tremper attributes the trend to employers focusing on workers’ long-term finances, efforts to curb turnover and recent state mandates.

California requires non-exempt firms with at least one employee to offer a state-run retirement program, while Delaware imposes a similar rule on firms with five or more W-2 workers. Small-business owners like Howard Telson say providing a 401(k) has become essential to attract staff from larger firms. Participation among hourly workers rose from about one-third to 45%, while salaried worker enrollment edged up from 70% to 73%.