Small firms turn to 401(k) plans to attract and keep staff

Facing the challenge of keeping employees, small-business owners are adopting 401(k) retirement plans traditionally offered by larger companies. Sara Marye added the benefit to The Stellar Teacher Company after promoting a long-time employee, noting it eases workers' concerns about future savings. Gusto’s internal analysis links 401(k) offerings to roughly 8% fewer departures in an employee’s first year, highlighting the plan’s strong retention ROI.

Howard Telson, who runs Scale CPA, uses the retirement option to attract talent from bigger firms, while Ashley Kent of Clearclear offers it to retain staff in a high-turnover agency environment. Payroll platforms such as Gusto and ADP provide low-cost administration, and tax credits are available for the first three years. The trend mirrors broader hiring-market shifts, with job ads increasingly mentioning 401(k) matches since 2020, according to data from Indeed and its Hiring Lab.