Maybe an employee asked about retirement benefits. Maybe you lost a good hire to a competitor who offered them. Or maybe you've just reached the point where you know it's time to start thinking about retirement plans for small businesses and you have no idea where to start. You're not alone. Many small business owners feel the same way the first time they wade into this territory.
The internet is full of guides written by providers who have a clear stake in what you choose, and most of them skip straight to product comparisons before you've had a chance to figure out what you really need. Think of this guide as a way to get your house in order, so that when you do start talking to providers you have a much more helpful conversation.
Why Most Small Business Owners Start in the Wrong Place
Jumping straight to comparing business 401(k) plans is a bit like hiring a contractor before you've decided what you want to build. You'll get a lot of pitches, some of them compelling, but you won't have the footing to evaluate them properly.
The major provider platforms are often focused on delivering their own solutions, which is why it can be helpful to first clarify what features and structure best fit your business. And most independent guides on this topic skip straight to fee structures and payroll integrations, assuming you already know what you want.
A better first move is to get clarity on your own situation. Once you do that, the next steps may become more straightforward to evaluate everything else (plan type, provider choice, cost) becomes a lot easier to evaluate. Let’s go over four questions worth asking before you start shopping for retirement plans for small businesses.
Question 1: What's Your Goal in Offering a Retirement Plan?
This sounds obvious, but it's worth being specific. The most common reasons small business owners set up a retirement plan are:
To attract and retain talent
Because the state mandates such plans
To maximize the owner's own retirement savings
To offer a meaningful benefit on a limited budget
Your goal determines the right plan type. An owner who primarily wants to maximize their own retirement contributions has different needs than one trying to boost broad employee participation on a tight budget.
A short list of goals and options for small-business retirement plans include:
Maximize owner savings: Solo 401(k) (if you have no full-time employees) or a traditional 401(k) with profit sharing
Broad employee benefit with flexibility: Traditional business 401(k) plan or SIMPLE IRA
Keep it simple and low-cost: SEP-IRA or SIMPLE IRA
You don't need to have this figured out completely before talking to anyone, but having a clear primary driver will help you cut through a lot of the noise.
Question 2: How Many Employees Do You Have and/or Expect to Have?
Headcount matters more than most owners realize when it comes to retirement plans for small businesses. Eligibility rules, plan types, and compliance requirements all shift based on the size of your workforce, and what works well at 10 employees may not be the right structure at 40. A few things to factor into your decision include:
Solo or no full-time employees: A Solo 401(k) gives you the highest potential contribution limits of any plan type (up to $70,000 in 2025 between employee deferrals and employer contributions) but it closes as soon as you hire full-time W-2 employees.
Under 25 employees: Under the SECURE 2.0 Act, employers with 25 or fewer employees offering SIMPLE IRA plans can access enhanced deferral limits (an important consideration when evaluating cost and benefit together).
26–100 employees: SIMPLE IRAs are still available, and traditional 401(k) plans become more attractive as the workforce grows.
Crossing 100 participants: Once you hit this threshold, your employer sponsored retirement plan becomes subject to annual audit requirements. If growth is on the horizon, it's worth factoring that compliance cost into your planning now rather than later.
The right plan isn't just the one that works today; it's the one that can continue to align with your business as it grows.
Question 3: Do You Understand What You're Signing Up for as a Plan Sponsor?
This is the question most guides skip entirely, and it's one of the most important.
When you offer a business 401(k) plan, you become a plan fiduciary. That's a legal designation, not just a label. It means you are personally responsible for acting in your employees' best interests when it comes to investment selection, plan administration, and compliance with Department of Labor and IRS regulations.
Fiduciary responsibility is bona fide legal exposure. Lawsuits against plan sponsors, including small businesses, do happen and they typically center on issues like excessive fees, poor investment options, or failure to follow the plan document.
But you don't have to carry all of that responsibility yourself. There are two types of investment fiduciaries worth understanding in this regard:
3(21) fiduciary: A co-fiduciary makes investment recommendations, but the plan sponsor retains final decision-making authority, and the liability that comes with it.
3(38) fiduciary: An investment manager takes full discretionary authority over the investment lineup, assuming discretionary control over investment decisions, which may reduce certain fiduciary responsibilities for the plan sponsor.
This distinction is one of the clearest reasons to consider working with an independent advisor rather than going it alone with a mere recordkeeper. Big platforms don't automatically assume fiduciary responsibility for your investment selections; that service has to be specifically added, if it's available at all. An independent advisor who serves as or arranges a 3(38) fiduciary is giving you something which may provide additional support beyond plan implementation.
Understanding your obligations as someone who runs an employer sponsored retirement plan before you sign anything is essential.
Question 4: What's Your Budget, Really?
"How much does a 401(k) cost?" is one of the most common questions small business owners ask, and it's harder to answer than it should be because the costs aren't always presented clearly; here's an honest accounting:
Plan setup fees: A one-time charge to establish the plan, ranging from free to several hundred dollars depending on the provider
Monthly or annual administration fees: Ongoing recordkeeping and platform costs
Per-participant fees: Some providers charge per enrolled employee
Investment expense ratios: Often buried in fund descriptions, where the real long-term cost difference between providers shows up
Third-party administrator (TPA) fees: If your plan requires separate administration (common with more complex plan designs)
Remember that total cost of ownership matters more than the headline price. A plan with a $100/month platform fee but 1.00% average fund expense ratios can cost dramatically more over time than a plan at $200/month with 0.07% fund fees, especially as assets grow.
One factor that changes the math significantly is the SECURE 2.0 Act tax credits. With these tax credits, eligible small businesses can receive up to $5,000 per year for the first three years of a new plan to offset startup costs, plus an additional $500 annual credit if they include auto-enrollment. For many small businesses, these credits effectively cover a large portion of year-one costs. If you haven't investigated this yet, it's worth doing before you make any final decisions on how to choose a 401(k) provider for businesses.
Now You're Ready: Questions to Ask a 401(k) Provider
Once you've answered the four questions above, you'll be in a much stronger position to evaluate your options and ask your own questions. Here are six specific questions for you to bring to any provider conversation:
Fees: Are there any fees embedded in the fund lineup? What is the all-in cost per participant, including investment expenses?
Fiduciary: What type of fiduciary are you, 3(21) or 3(38)? Are you willing to put that in writing?
Compliance: Do you handle nondiscrimination testing and Form 5500 filing or is that handled separately?
Payroll integration: Does your platform connect directly to my payroll system, and what does that setup look like?
Employee experience: What financial education or enrollment tools do employees get access to?
Scalability: How does the plan structure or cost change as I add employees or cross the 100-participant threshold?
These questions won't apply equally to every situation, but asking them will tell you a good deal about whether a provider is truly set up to serve businesses like yours or simply process your paperwork.
The Case for Working With an Independent Advisor
There's a significant difference between going directly to a platform provider and working with an independent advisor. A platform provider typically offers its own plan solutions, while an advisor may assist in evaluating plan design features, comparing providers, and coordinating fiduciary support.
Start With a Conversation
Employers who take time to plan ahead are often better positioned to implement a retirement plan that aligns with their goals; they knew what they were trying to accomplish, understood what they were taking on, and asked the right questions before anyone put a contract in front of them.
If you're evaluating 401(k) options, Tide Creek Financial Group offers consultations to help business owners review their considerations and available plan structures. No pressure. Just a straightforward conversation about what makes sense for your business and the people who work for it.
This content is for informational and educational purposes only and should not be construed as individualized investment, tax, or legal advice. Retirement plan decisions involve business-specific considerations, and readers should consult with qualified professionals before implementing any strategy.
Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC (www.SIPC.org). Tide Creek Financial Group is not a subsidiary or affiliate of MML Investors Services, LLC, or its affiliated companies. Supervisory Address: 11350 McCormick Road Exec PL IV Suite 200, Hunt Valley, MD 21031. (410)785-7654.
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