How Business Owners Can Benefit from Their 401(k)

How Business Owners Can Benefit from Their 401(k)

Offering a 401(k) plan is a great choice you can make—not just for your employees, but also for yourself as a business owner. A well-designed retirement plan can help you save more, lower your taxes, attract top talent, and even manage long-term payroll costs.

Let’s break down how your 401(k) can work harder for you and your business.

Lower Your Taxable Income

One of the biggest perks of a 401(k)? Tax savings. In 2025, you can contribute up to $23,500 pre-tax to your 401(k), plus an extra $7,500 if you’re over 50. That’s up to $31,000 you can deduct from your taxable income.

Want to save even more? With profit sharing, you could contribute up to $70,000—or $77,500 with catch-up contributions. That’s a huge opportunity to grow your retirement savings while reducing your tax bill.

To hit those higher limits, your plan needs to pass IRS compliance tests. Many business owners choose a Safe Harbor 401(k) to make this easier. It ensures all employees get a fair contribution and helps you avoid costly testing failures.

Attract and Keep Top Talent

In today’s tight job market, a strong 401(k) plan can give you a serious edge. With unemployment hovering around 4.2% as of April 2025 ¹, skilled workers have options—and they’re looking closely at benefits.

Offering a competitive retirement plan helps you:

• Stand out to top candidates
• Show long-term commitment to your team
• Reduce turnover and hiring costs

And it’s not just about hiring. A great 401(k) can help you retain your best people. Nearly 80% of Americans worry that rising living costs will make it harder to save, and almost half of retirees say they spend less because they’re afraid of running out of money. ² Employees are more likely to stay when they feel their future is being taken care of.

Boost Your Own Retirement Readiness

As a business owner, your personal finances are often tied to your company. A 401(k) gives you a way to build independent retirement savings—and potentially retire on your own terms.

With options like profit sharing and cross-tested plans, you can structure contributions to benefit yourself while still supporting your team. These plans allow you to group employees and allocate contributions in a way that maximizes your own savings potential.

Help Employees Retire on Time

Here’s something many business owners don’t think about: when employees can’t afford to retire, it can cost your business.

• Older employees staying longer = higher payroll costs
  • In fact, each employee who delays retirement can cost your business an average of $50,000 per year in extra expenses. ³
• Fewer advancement opportunities for younger staff
  • Even those who have been working for many years are worried, as more Americans than ever say they plan to work until they’re 70. ⁴
• Increased risk of burnout and turnover
  • If just 4% of your team is at retirement age and even half of them delay retiring, it could stall career growth for up to 10% of your workforce ⁵—leading to frustration, lost motivation, and rising talent walking out the door.

A strong 401(k) helps your team build enough savings to retire when they’re ready. Features like employer matching, profit sharing, and catch-up contributions (for those 50+) can make a big difference in helping employees feel financially secure.

Plan for the Future of Your Business

Your 401(k) plan can also play a role in your succession planning. Whether you’re thinking about selling, passing the business to a partner, or stepping back gradually, having a solid retirement plan in place gives you more flexibility and peace of mind.

At Fisher\SMB^TM, we specialize in helping business owners like you get the most out of their retirement plans. Whether you’re just getting started or looking to upgrade your current plan, we’re here to help. Let’s talk about how your 401(k) can work harder for you.

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