Small-Business Owners Worry about Keeping 401(k) Match

As small-business owners fret about their ability to offer a 401(k) match, investment professionals can help.

A Nationwide Financial Services survey found that 44% of all of the employers who responded said they may have to cut back or cut out their 401(k) match. Small-business owners seemed more concerned. Some 75% of polled small businesses don’t expect the economy to affect their ability to continue offering a 401(k) plan, but 51% of the small-business owners anticipate the downturn could force them to reduce or eliminate their matching contributions.

“Investment professionals can play an essential role in helping small businesses continue to offer a competitive retirement plan to their employees even in the wake of the economic downturn,’ said Bill Jackson, president of Nationwide Retirement Plans, in a release of the survey results. “The survey shows that small businesses want to work with investment professionals who understand their company’s needs and can develop customized solutions to address them.”

The survey found that 75% of small businesses that have an investment professional place strong importance on their ability to understand the company’s unique needs. In addition, 7% said that they value an investment professional’s ability to help them meet their legal responsibilities associated with offering a retirement plan. Companies with between five and 50 employees were more likely than those with more than 50 to indicate they need help meeting legal obligations.

Companies were asked to rank their top concerns regarding their retirement plan and found that 31% listed providing investment education to employees as their biggest concern. That concern increased among plans with a higher asset size, according to Nationwide.

Other concerns included:

  • fiduciary and legal responsibilities related to the plan (29%)
  • selection and monitoring of retirement plan investment options (21%)
  • investment and administrative fees (12%).

An independent market research firm conducted phone interviews between December and March. A total of 401 employers with a 401(k) plan completed the survey.