When running a small business, it’s easy to focus on today’s challenges: making payroll, satisfying customers, and keeping the doors open. With many pressing demands, reviewing or starting a 401(k) plan may not seem a top priority.
But here’s the reality: a thoughtfully designed retirement plan is one of the most impactful decisions you can make for your employees and yourself.
I’ve worked with many business owners who either put off offering a retirement plan because they assumed it was too complicated, or they set one up years ago and haven’t touched it since. The purpose of this blog post is to walk you through why 401(k) plans matter, how they can work for small businesses, and practical steps you can take, whether starting from scratch or re-energizing an existing plan.
Think of me as your financial advisor in San Antonio. I have the heart of a teacher. My goal is to educate you to make confident, informed decisions.
Why Your 401(k) Plan Matters Now More Than Ever
In today’s competitive job market, benefits can make or break your ability to attract and retain great employees. We might compete for some of the same talent in every industry, like healthcare, construction, professional services, and technology. One of the first questions job candidates ask is: What kind of benefits do you offer?
Health insurance often tops the list, but retirement benefits aren’t far behind. For many employees, especially younger ones, a retirement plan signals that the company cares about their long-term financial well-being. Without it, you may lose good people to competitors who offer one.
But the impact goes beyond recruitment. A comprehensive retirement plan may help:
- Reduce turnover by encouraging loyalty.
- Boost morale by showing employees you’re invested in their future.
- Build a stronger culture by aligning your company with long-term stability and growth.
As a small business owner in San Antonio, offering competitive healthcare benefits isn’t just about keeping up with the competition. It’s about building a foundation for your employees’ futures and your own.
401(k) Plans: Not Just for Big Companies
One of the biggest misconceptions I hear is: “401(k) plans are too expensive or too complicated for a small business like mine.” That may have been true 20 years ago, but today’s retirement plan marketplace is very different.
Thanks to legislation like the SECURE Act 2.0, San Antonio small businesses can now access significant tax credits that offset the cost of starting a plan. These credits can offset your startup expenses. There are also simplified plan designs that make administration much easier than in the past.
Whether you have five employees or ninety-five, you can build a plan that fits your size, budget, and goals.
Key Features Business Owners Should Consider
When it comes to designing or refreshing your 401(k) plan, several features can make a big difference:
- Safe Harbor 401(k) Plans
A Safe Harbor 401(k) retirement plan automatically satisfies IRS nondiscrimination testing by requiring the employer to contribute to employees’ accounts. These contributions can be a match or a non-elective contribution and must be fully vested immediately.
As a business owner, it’s a way to maximize your 401(k) contributions while giving employees guaranteed benefits.
- Matching Contributions
Another way to encourage your employees to save for retirement while gaining a tax deduction is to offer a contribution match. This is one of the most powerful tools for driving employee retention, keeping them engaged, and demonstrating your commitment to your team. Plus, your employer contributions are tax-deductible.
- Roth 401(k) Contributions
Traditional 401(k) contributions are tax-deferred, meaning employees pay taxes later when they withdraw funds. However, Roth 401(k) contributions are made with after-tax dollars, but grow tax-free. Offering both options gives employees valuable flexibility and tax diversification as part of their retirement planning efforts.
- Profit-Sharing Options
Some plans allow you to share company profits with employees tax-efficiently. You can decide how much to contribute year by year, giving you flexibility based on your company’s performance. For employees, it’s a powerful motivator; for you, it’s a way to tie rewards directly to business success.
Are you considering an exit for your business? Watch our podcast, “Business Exit Planning Essential Tips for a Successful Transition.”
The Owner’s Perspective: Why This Matters for You
Many business owners I meet have much of their wealth tied up in their company. They reinvest profits year after year, which helps the business grow but leaves their personal financial future overly dependent on one asset: the business itself.
A 401(k) plan changes that dynamic. It allows you to:
- Diversify your wealth by moving money out of the business and into personal retirement savings.
- Reduce taxable income through contributions, depending on your situation.
- Save aggressively for your own retirement while still helping your employees.
- Create an exit plan, since having a personal nest egg gives you more flexibility when stepping away from the business.
In other words, a 401(k) plan isn’t just a benefit for employees. It’s a tool for protecting your personal financial future.
Tax Benefits of Starting a 401(k) Plan for Employees
- Startup Tax Credits
The IRS offers tax credits to offset the cost of launching a new 401(k). Eligible San Antonio businesses can claim up to $5,000 per year for the first three years, plus an additional $500 per year if the plan includes automatic enrollment. That’s up to $16,500 in potential tax credits.
- Employer Contributions Are Deductible
When you match or contribute to your employees’ 401(k) accounts, those contributions are generally tax-deductible as a business expense. This reduces your company’s taxable income while also supporting your employees’ retirement savings.
- Owners Can Save More for Themselves
A 401(k) plan doesn’t just benefit employees; it also allows you, as the business owner, to contribute significantly to your own retirement accounts. In 2025, owners can contribute up to $23,000 (plus a $7,500 catch-up if age 50+) and potentially much more with profit-sharing, all while reducing taxable income.
- Lower Payroll Taxes with Pre-Tax Contributions
Because employee contributions reduce taxable wages, your business may also save on payroll taxes.
Red Flags That Your 401(k) Plan Needs a Review
Maybe you already have a 401(k) plan, but it hasn’t been reviewed in years. If so, you’re not alone. Here are some warning signs that it might be time to revisit your plan:
- Low employee participation rates
- High fees that eat into returns
- Limited investment options
- Confusing or outdated plan design
- Compliance headaches with IRS testing
A poorly working plan can hurt morale and create unnecessary costs. The good news is that most of these issues are fixable with the proper guidance.
Watch our founder, Darryl Lyon, discuss the need to regularly review your 401(k) plan.
The Local Advantage: Why Work With PAX Financial Group
Choosing a 401(k) provider is essential, but so is choosing the right financial advisor in San Antonio. At PAX Financial Group, we service clients nationwide and in the Greater San Antonio area.
We provide services to industries that drive our economy, from medical practices and construction firms to tech startups and family-owned businesses. We understand the challenges small business owners face here, and we design plans that address those challenges directly.
Working with a local financial advisor from PAX Financial means regular face-to-face meetings and personal guidance, not being treated like just a number at a call center.
We’re accessible. We’ll meet with you regularly to discuss various retirement plan strategies in plain English and help you educate your employees so they feel confident using the benefit.
How We Help Business Owners with 401(k) Plans
At PAX Financial Group, our approach to retirement planning is built on education and partnership. Here’s what that looks like in practice:
- Plan Review: If you already have a plan, we analyze it for fees, participation, and design issues.
- Plan Design: If you’re starting from scratch, we can help you select the right structure (Safe Harbor, traditional, SIMPLE, etc.) for your goals.
- Implementation: We work with you throughout the entire process, from the setup, paperwork, and employee education sessions, to make sure your team understands the benefit.
- Ongoing Advice: We monitor the plan, adjust as needed, and help ensure compliance so you can focus on running your business.
Our goal is simple: to make your retirement plan work for you and your employees.
Get to Know PAX Financial
Your employees depend on you today, but you can also assist them in preparing for their financial future. Remember that a 401(k) plan is more than just a benefit. It’s a statement: We’re here to help you save for the future.
Whether starting from scratch or revisiting a plan that hasn’t been thought about in a while, now is the time to take action. With the right design, tax incentives, and guidance, your retirement plan can become one of your business’s most valuable assets.
And remember: taking care of your employees’ futures starts with taking care of your own. By investing in a 401(k) strategy today, you’re building security—not just for your team but also for yourself and your family.
