Small business adoption of retirement plans rises
New data shows a significant increase in retirement plan access for small business employees, driven by automation and legislative changes.
Retirement plan adoption among U.S. businesses with two to 99 employees climbed from 19% in 2019 to 31% by 2026, according to analysis from payroll provider Gusto. The surge is most prominent among the smallest employers, with companies employing fewer than five people doubling their adoption rates.
The shift is attributed to a combination of state-mandated auto-IRA programs and the SECURE 2.0 Act, which introduced tax credits to offset plan startup costs. Additionally, the integration of benefits management directly into payroll software has reduced the administrative burden that previously discouraged small firms from offering retirement packages.
Despite the growth, barriers remain. Research indicates that many eligible employers are failing to claim available tax credits due to a lack of awareness. Policy experts and industry participants are now advocating for further measures, such as the proposed RISE Act, which aims to make tax incentives more accessible and expand coverage to hourly workers who have historically lacked access to workplace benefits.