More Small Businesses Are Offering 401(K) Plans To Workers

More Small Businesses Are Offering 401(K) Plans To Workers

Wed, August 26, 2026 at 4:30 PM GMT+3 2 min read

Small businesses are increasingly offering retirement plans to employees, expanding access to a workplace benefit that has historically been less common among the nation's smallest employers, HR Brew reports.

About 31% of small businesses had active retirement plans in 2026, up from 19% in 2019, a 64% increase, according to an analysis from payroll and benefits platform Gusto. The research examined private-sector businesses with two to 99 employees using payroll data through June 2026.

The growth has been particularly significant for hourly workers. The share with access to a workplace retirement plan rose from 21% in 2019 to 38% in 2026. Hospitality businesses tripled their adoption rate from 4% to 12%, while recreation and agriculture businesses increased by 147% and 122%, respectively.

"Most of that growth has been happening at very smallest employers," Nich Tremper, head of Gusto Insights and a senior economist, told HR Brew.

Government policies have helped fuel the expansion. As of June, 18 states had enacted automatic IRA programs requiring many private employers to either offer a retirement plan or facilitate employee enrollment in a state-managed program, according to the outlet. The federal SECURE 2.0 Act also provides qualifying businesses with one to 100 employees with tax credits to help offset the cost of establishing retirement plans for up to three years.

But policy is not the only factor. Separate Gusto research analyzing payroll records from more than 500,000 small businesses found companies offering 401(k) plans had about 8% fewer first-year employee quits than otherwise similar businesses without them. Gusto noted the findings show an association and do not prove that 401(k)s directly cause lower turnover.

"It's expensive to have to go back out into the market and find somebody new and train them, and then also all of the lost productivity while you've got vacancies," Tremper told HR Brew.

The expansion could be particularly consequential for workers historically less likely to have workplace retirement benefits. Earlier Gusto research found 5.6 million more small-business workers had access to active retirement plans than in 2019. Access among Black employees increased 52%, while access among Hispanic employees rose 71%.

Still, Gusto found that more than half of small-business employees remain without access to a workplace retirement plan.

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