A Win-Win for Brokers: Why SMB Clients Should Offer a 401(k)

Quick look: Retirement benefits can be a powerful differentiator for small and mid-sized businesses, but many SMBs still don’t offer a 401(k). That creates an opportunity for brokers to bring an often-overlooked benefit to the table while strengthening their role as a strategic advisor. This National 401(k) Day, take a closer look at how this benefit can pay off for clients, current SECURE 2.0 provisions, and how a professional employer organization (PEO) simplifies and adds more value to the whole process.

According to the Society for Human Resource Management (SHRM), 90% of employers offered a 401(k) in 2026. However, that number drops significantly when you look at small businesses, with only 31% currently having an active retirement plan.

Brokers can help close this gap. By connecting clients to a PEO, you can enable small and mid-sized businesses (SMBs) to access a wide range of competitive benefits at a price point that fits their budget, while also strengthening their overall HR operation, from recruitment and retention to compliance and culture.

National 401(k) Day, observed each year on the Friday following Labor Day, is a good reminder of how much retirement readiness matters, and how much influence brokers have in helping worksite employees get there.

3 reasons your clients should offer a 401(k) plan

Companies that add a 401(k) to their benefits lineup tend to see the payoff across various aspects of their business.

1. Stronger recruiting and retention

Many job candidates, particularly younger workers who comprise a growing share of the labor force, are prioritizing retirement savings earlier than past generations did. The typical Gen Z employee started saving at age 20, compared to 26 for Millennials, 30 for Gen X, and 35 for Baby Boomers.

Offering a 401(k) also builds loyalty once employees are on board, potentially helping SMBs avoid the costly process of replacing departing staff (per SHRM’s 2025 Benchmarking Report, recruiting and onboarding a non-executive role costs employers an average of $5,475). And on top of that direct cost, turnover typically temporarily reduces productivity and can erode morale across the rest of the team.

That makes retirement benefits a valuable addition to conversations about recruitment and retention.

2. Tax advantages

Cost is often one of the first concerns SMBs raise when considering a retirement plan. The SECURE 2.0 Act can help change that conversation.

Before the Act, the tax credit for a new 401(k)’s first three years covered 50% of qualified startup costs, capped at $500. The Act raised that to as much as $5,000 for qualified businesses with one to 100 employees, and employers can further deduct any match contributions they make, chipping away at their tax liability even more.

Employer matching and profit-sharing contributions are generally tax-deductible on federal income tax returns, up to 25% of the compensation paid, subject to applicable limits.

Understanding these incentives can make it easier to help clients evaluate the potential cost of a plan alongside the broader value it can provide.

3. Increased engagement and productivity

A 401(k) can also improve how people show up at work. Personal finances are the leading cause of stress in U.S. adults, and PwC’s 2026 Employee Financial Wellness Survey found that 59% of respondents are currently stressed about their finances. This segment is five times more likely to report distractions at work, with half of them spending over three work hours per week managing these concerns.

An employer-sponsored retirement plan won’t solve every financial worry, but it can ease some of that stress and lead to a more focused, engaged team.

This is another opportunity for brokers to connect benefits strategy with the issues clients are seeing across their workforce.

401(k)s considerations brokers should have on their radar

Beyond the business case, brokers can also help clients understand the current state and federal rules and identify changes that may affect their plans, including:

State mandates

A growing number of states now require employers to offer some form of retirement plan. For example, New Jersey requires employers with 25 or more employees who don’t already sponsor a retirement plan, and who’ve been in business for at least two years, to facilitate enrollment in the state’s Secure Choice Savings Program.

Staying ahead of these requirements, and helping clients understand how they apply, can help identify potential compliance considerations and bring proactive guidance to client conversations.

SECURE 2.0 Act details

Signed into law in 2019, the original SECURE Act made it easier for SMBs to offer more affordable, lower-maintenance “safe harbor” retirement plans.

SECURE 2.0 built on that foundation with several updates:

• Bigger tax credits for SMBs launching a new retirement plan
• The option to match employee contributions based on their student loan payments, not just their 401(k) deferrals
• Higher catch-up contribution limits for older workers
• Expanded eligibility for part-time employees
• Employers offering 401(k) or 403(b) plans must automatically enroll eligible employees at a contribution rate of at least 3%, increasing by 1% each year until it reaches 10% (phased in starting 2025). Employees, however, can choose to opt out.

By advising clients on these features, you can help them join the 58% of surveyed employers that have added at least one of them. A conversation about retirement benefits can uncover opportunities to improve an existing plan or introduce a solution for a client that doesn’t currently offer one.

Click here to view the complete SECURE 2.0 Act >>

How a PEO simplifies retirement saving

Guiding clients to the right retirement solution is powerful. You enable employees to save for their future, while also helping your clients compete for and retain top talent and qualify for additional tax credits.

But when a client decides to offer a 401(k), the next question is often: who is going to manage it?

Working with a PEO like ExtensisHR gives brokers a way to help clients implement and manage a retirement plan while also addressing other HR needs under one relationship. Clients get support with plan administration, compliance, employee eligibility, and other HR responsibilities, while gaining access to benefits and retirement solutions at rates that are often more competitive than what they’d receive on their own.

ExtensisHR supports you and your clients through every step of setting up a 401(k), including guidance on eligibility, vesting, matching, profit-sharing contributions, and tax incentives. And with a broad range of investment options, clients can adjust their plan as their organization grows.

Saving for retirement isn’t a question of if for most employees, it’s a question of when. And by partnering with a PEO, your clients will be ready to meet these needs and empower their workforce’s financial well-being for years to come.