According to a survey from Fidelity Investments, when asked a series of basic questions about their retirement plan features and benefits, small-business owner respondents on average only answered 66% correctly. For example:
• Half who use a self-employed 401(k) did not know the maximum annual employer contribution allowed for this plan;
• Nearly two-thirds (60%) with SIMPLE IRAs were not aware that employer tax filing is not required; and
• More than half (55%) using an SEP IRA did not know that the plan is funded solely by employer contributions.
In addition to uncovering a knowledge gap among respondents who currently have a retirement plan, 100 small-business owners who do not have a retirement savings plan were surveyed. The top reason (34%) cited for not having a retirement plan is the perception that it is too expensive.