Many of the myths that revolve around a business not starting a 401K seem to focus on small businesses. And rightfully so, as small businesses sometimes don’t have the benefit of strong steady cash flow, as well as an out-and-out ability to contribute to an employee benefit plan, even if they wanted to do so.

Ninety-nine percent of businesses with over 500 employees offer a 401K program, while only 24 percent of businesses with 50 employees or less give the same allowances. The result of this can arrive with many Americans not having the resources toward retirement, and with that, might still have to work long after their retirement age.

The myths and reasons could be many. But according to a recent Forbes.com article, three main myths exist as to why small businesses do not have 401K plans in place.

Myths Preventing Small Businesses From Starting 401Ks

1. The Fewer The Employees, The Less Worthwhile The Program

This is so far from the truth that it tends to do a disservice to small businesses. For the fact remains no business is too small to provide a 401K plan, as 401Ks, by nature, offer benefits to a company of any size.

This is shown through higher tax benefits to employers who provide high contributions. The more a company contributes, the less that company pays in taxes.

Secondly, emergency cash flow access can be given to a business through loans taken against 401Ks, in addition to other opportunities and benefits. A 401K, in fact, could help save a business.

2. An Inability To Afford To Contribute

While business aren’t required to offer matching benefits to employees who join their 401K program, doing so can be hugely beneficial to both the employer and employee. The largest benefit of contributing to one’s employee 401K is the employee loyalty that will automatically follow. For them to know their work is appreciated through a business owner’s contributions can speak volumes in future dedication.

3. Inability to Afford The Management Fees

Many low-cost providers exist that can assist a business, no matter what size, with its 401K program, and do so for quite a nominal amount. In fact, it’s been pointed out that a small business with 10 or fewer employees will pay on average only $80 to $100 a month for their 401K plan to be managed by an outside service.

Most highly-regarded plan providers are able to control the costs paid from employees while also keeping investment expenses under 1% toward fund expense ratios, recordkeeping as well as asset management. It is said that when investigating outlets who manage 401Ks, that the 1% benchmark should be kept in mind as the standard.

The End Result

The positive results that come of a small business setting up a 401K program for its employees work both ways. On the employer side, a small company protects itself not only with on-the-ready cash flow, but can also realize higher tax deductions. On the employee side, the workers feel appreciated by their employer’s contribution to not just their day-to-day work, but their retirement future as well.

Dave Landry Jr. is a financial consultant and debt relief counselor, working with National Debt Relief to advise people in financial crises and guiding them to a solution. Dave hopes you enjoy this article and wishes you luck in your small-business endeavors.