Should local small businesses have a retirement plan?

It’s a tight labor market out there. Businesses big and small are competing for talent so they can keep their doors open. Organizations continue to ask themselves what they can do to attract more workers.

It’s created an interesting dilemma for small businesses owners. Some (maybe most) have started to consider offering higher wages but what other benefits should be offered? What about a retirement plan?

A retirement plan may seem like a standard benefit but these plans have been out of reach for most small businesses for a long time. In fact, approximately 44 percent of the state’s private-sector employees lack access to a retirement plan at work according to research by AARP. That’s nearly two million people!

Why it’s important

Most people save for retirement through their workplace. It’s convenient and makes saving easy. When an organization does not offer a plan for its staff, that can limit their options for saving and create barriers to retirement.

Not to mention, our state (and country) are in a retirement savings crisis. Due to a growing population that is ready to retire and poor savings habits, many experts believe a large part of the population will lack the resources to live comfortably after they stop working. Pennsylvania has estimated that its retirement savings gap will cost taxpayers more than $14 billion over a 15-year period.

From a business standpoint, the IRS offers several tax breaks for small business start-up plans, which can be very helpful. These tax breaks essentially serve as an incentive for small businesses to start a plan.

Why aren’t plans offered?

When it comes to not offering a retirement plan, most small business owners are not aware of the options available to them. Many believe that their business is too small to qualify for a plan. Others believe that plans are too expensive to start and take too much time to manage. Small business owners have a tremendous amount of responsibility – sometimes these barriers can just be too much of a hurdle to start the retirement plan conversation.

While all of these objections can be true in some cases, the retirement industry has come a long way in increasing the availability of plans for smaller organizations.

There are options

While many small businesses believe a retirement plan isn’t a viable option, there are actually opportunities available to them and lawmakers continue to look for new solutions. When most people think about retirement plans, they think about the traditional 401(k) plan. While these plans can make sense for some smaller organizations, there are also SIMPLE IRAs and SEP IRAs. IRAs can be a good fit for some smaller employers but also have drawbacks and are not as flexible as 401(k) plans.

The state has also jumped into trying to increase access to plans by introducing their Keystone Saves program. This plan does not currently exist and is in the very early stages – it may not be offered for some time. Keystone Saves would allow Pennsylvania to join dozens of other states to offer a state-sponsored retirement plan. The program would let workers without access to a plan invest for their retirement through automatic and regular payroll contributions to fund IRAs. While this could be another option for small businesses, it is likely years away from being implemented.

A new retirement plan option for Central PA businesses

Conrad Siegel recently announced the area’s first locally developed pooled employer plan (PEP). Central PA 401(k), by Conrad Siegel was developed after the SECURE Act paved the way for this new type of plan in 2020. PEPs allow multiple employers (of any industry) to join a single retirement plan, rather than having to each start their own plan. This type of plan should theoretically can save business owners time and money.

The Central PA 401(k) is a turnkey retirement plan that is fully managed by Conrad Siegel. The plan is designed for local businesses and is hands-off for business owners. Conrad Siegel handles the plan administration, recordkeeping, investments, education, obtaining ERISA bond coverage and fiduciary oversight. To learn more about the Central PA 401(k), by Conrad Siegel, visit

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