The Risk of Not Offering a 401(k): What Companies Lose by Waiting

A surprising number of small and mid-sized businesses still operate without a formal retirement plan. Some believe they’re “too small” to offer a 401(k,” others assume it’s too expensive, and many simply put the decision off until the business matures. But delaying a 401(k) plan comes at a cost—one that grows larger each year. In today’s competitive hiring environment, not offering a retirement plan isn’t a neutral choice. It’s a strategic disadvantage.

The most immediate risk is in recruitment. Employees have higher expectations than ever before, and retirement benefits sit near the top of the list when evaluating job offers. Even for younger workers, the absence of a 401(k) signals a lack of long-term structure and support. When a competing employer offers a clear path to retirement savings, Roth options, matching contributions, and financial wellness tools, candidates gravitate toward the company that supports their financial future. Without a plan, you’re asking new hires to overlook what many now consider a basic benefit.

Retention is equally impacted. Your best employees—the ones you want to keep—tend to think about their financial future more proactively. When they realize their peers at similar companies are receiving employer contributions and building long-term wealth through structured retirement benefits, it becomes harder to justify staying. A lack of a 401(k) unintentionally pushes your team to consider opportunities elsewhere, even if they enjoy the work itself. Benefits drive loyalty, and retirement benefits are among the strongest signals of employer commitment.

There is also a hidden cost that employers often overlook: owner and key employee retirement planning. Without a 401(k), business owners lose the ability to make tax-advantaged contributions, implement profit-sharing strategies, or take advantage of higher retirement limits. SIMPLE IRAs, SEPs, and taxable brokerage accounts simply don’t offer the same level of flexibility or tax leverage. Each year you delay a 401(k), you’re missing opportunities to reduce taxable income and build long-term wealth through structured contributions.

From a financial standpoint, delaying a 401(k) plan also means missing out on some of the most generous small-business tax credits available today. Under the SECURE Act and SECURE 2.0, employers can receive thousands of dollars in startup and matching credits simply for offering a plan. These credits can offset nearly all administrative costs in the early years. When you postpone implementing a plan, you’re essentially leaving free money on the table—money designed to help small businesses compete with larger employers.

Another risk is compliance drift. Businesses sometimes rely on informal or ad-hoc retirement support, such as suggesting that employees “set up their own IRA” or “save on the side.” While well-intentioned, this approach can lead to inconsistencies, employer confusion, and missed opportunities for employees. A structured plan creates clarity, documentation, and a defined process that ensures employees are supported consistently and appropriately.

At Apex Wealth Path, we see firsthand how transformative a 401(k) can be for companies that have delayed the decision. Once a plan is implemented—especially through a Pooled Employer Plan—business owners often say the same thing: We should have done this years ago. Costs drop, compliance becomes effortless, and employees respond overwhelmingly to a benefit that finally reflects the company’s growth and maturity.

The risk of not offering a 401(k) isn’t just financial—it’s strategic. When you wait, you fall behind competitors, limit owner tax benefits, miss out on federal credits, and reduce your appeal to both current and prospective employees. Offering a modern retirement plan is no longer difficult or expensive, and delaying only keeps your business from strengthening its long-term foundation.

👉 Learn how Apex Wealth Path can help you launch a modern 401(k) quickly, affordably, and with full fiduciary support—so you never fall behind again.