Small Business Retirement Plans Survived Recession

A six-year analysis of small businesses’ retirement plans by Fidelity Investments shows both sponsor and participant commitment during the recession.

The analysis of more than 200,000 small business accounts that utilize a Simplified Employee Pension Plan (SEP-IRA), Self-Employed 401(k) or Savings Incentive Match Plan for Employees (SIMPLE-IRA) with Fidelity shows average balances in these plans increased 20% since 2007, and jumped an average of 64% since 2008 when balances were generally at their lowest point.  

The average contribution to these retirement savings accounts increased across the board since 2007, with those using Self-Employed 401(k)s showing the largest increase of 21% to $20,950. Employer contributions to SEP-IRAs increased 14% from 2007, reaching $13,250 in at the end of 2012, while average employer/employee contributions to SIMPLE-IRAs increased the least, rising 4% to $6,000.   

As a result of the increased contributions and market rebound, average balances also have grown since 2007. The average balance of Self-Employed 401(k) plans rose from $103,400 in 2007 to $119,500 in 2012—a 16% increase over six years—signaling a strong rebound for small business owners who are using retirement plans for savings purposes. SEP-IRA and SIMPLE-IRA balances also increased by 17% to $71,300 and 26% to $31,100, respectively.