The small business retirement plan playbook: eight steps to a plan that works for the owner and the team

Most small business plans are set up once and then left alone. The plans that serve people well are designed on purpose: around what the owner wants to save, what the team will value and what the business can afford. This playbook walks through the decisions in the order we make them with clients.

1. Set three goals

Before comparing plans, write down three numbers or priorities. They drive every choice that follows.

• The owner’s savings target. How much you want to put away each year, and whether you want room for more later.
• The team benefit. What you want employees to receive, and whether the plan should help with hiring and keeping people.
• The budget. What the business can commit to each year in employer contributions and plan costs, before tax credits.

2. Know where you stand on CalSavers

Most California employers with at least one eligible employee must now offer a qualified retirement plan or register with CalSavers. If you adopt your own plan, you certify your exemption on the CalSavers employer portal. CalSavers meets the rule, but employers cannot contribute and savings limits are lower. See CalSavers or your own plan?

3. Choose the plan type

The plan type sets the ceiling on what the owner and the team can save and what the business must contribute.

Full comparison, with 2026 limits: SIMPLE IRA vs. SEP IRA vs. 401(k).

4. Design the details

Two plans of the same type can work very differently. These are the choices that matter most.

• Eligibility. When new hires can join. Part-time employees who work at least 500 hours in two consecutive years must generally be allowed to make their own 401(k) contributions.
• Employer contribution. A match, a fixed contribution to everyone, or profit sharing. A match can be shaped to reward saving more, for example matching a smaller percentage over a wider range of pay, while keeping the cost predictable. A safe harbor design can protect the owner’s own savings from testing refunds.
• Vesting. How long employees must stay to keep employer money. Safe harbor contributions vest immediately.
• Automatic enrollment. Under SECURE 2.0, most new 401(k) plans must automatically enroll eligible employees, with exceptions that include businesses with 10 or fewer employees and those in business less than three years. Even when optional, it tends to raise participation.
• Automatic increases. Raising each employee’s savings rate a little each year, unless they opt out, helps people save more without having to decide again.
• Roth option. Lets employees choose after-tax contributions alongside pre-tax.

5. Choose providers and share the fiduciary work

A 401(k) usually involves three roles: a recordkeeper that holds the accounts and runs the website, a third-party administrator for testing and filings, and an investment adviser. As plan sponsor, the owner is a fiduciary. You can share part of that responsibility with an adviser who acts as a 3(21) co-fiduciary or a 3(38) investment manager. See your fiduciary duties as a plan sponsor.

Ask every provider for its fees in writing so you can compare the full cost. Sort them into four groups:

• Recordkeeping and administration. The platform, testing and filings.
• Advice. What the plan adviser is paid, and how.
• Investment expenses. Each fund’s expense ratio, paid inside the fund.
• Participant fees. Charges for loans, distributions and similar transactions.

Small differences add up. In its guide to 401(k) fees, the U.S. Department of Labor shows how one percentage point more in annual fees can reduce an account balance by 28% over 35 years.

Then document how decisions are made: a written investment policy statement, a regular review of fees, investments and providers, and short notes of each review. The goal is not perfection, it is a prudent, repeatable process you can show.

6. Capture the tax credits

Eligible employers with up to 100 employees can claim federal credits for startup costs, for employer contributions and for adding automatic enrollment. For the smallest businesses they can offset a large share of the early cost. Details and a worked example: what a plan really costs after SECURE 2.0 credits. Your CPA should confirm eligibility.

7. Launch it well

• Connect payroll so contributions flow on every pay date.
• Hold a short enrollment meeting and give each employee a one-page summary.
• Keep education simple and regular: how much to save to get the full match, Roth or pre-tax, and how to read the fee disclosure.
• Explain the employer contribution in dollars, not percentages. See making the benefit visible.
• Make enrollment part of onboarding, so every new hire hears about the plan in their first week.
• Certify your CalSavers exemption once the plan is in place.

Timing: a new SIMPLE IRA generally must be set up by October 1 to cover the current year, and a new safe harbor 401(k) generally needs at least three months in its first plan year. Other plans have more flexibility. Confirm dates for your situation.

8. Run it every year

How to tell if your plan is working

• Participation. The share of eligible employees who are saving.
• Savings rate. How much employees contribute on average, and whether it rises over time.
• Owner results. Whether the owner is reaching the savings target set in step 1, without testing refunds.
• Total cost. All-in plan and fund fees compared with similar plans.
• Employee feedback. Whether people understand the plan and value it when recruiting and retaining.

Already have a plan? A 90-day review

For a printable version of these steps, get the small business retirement plan checklist.

General educational information as of September 24, 2026; limits, deadlines and rules change. Not individualized investment, tax or legal advice. Consult your tax adviser about your situation.