Small businesses want to recruit and retain top talent, yet according to new research only a handful are giving employees what they want: a way to save for retirement. 

According to the United States Government Accountability Office (GAO), only about 14% of small business owners offer employees some type of company sponsored retirement program. And the low number isn’t just a result of the costs associated with a retirement plan. The government found that a lot of small business owners are overwhelmed by the options and their responsibilities when it comes to company sponsored plans.

“The biggest challenge small businesses have is finding providers who will work with them,” says Andrew Meadows, consumer and brand ambassador at The Online 401(k). “If you were a seven person company that never had a 401(K) plan and want to offer benefits [the large providers] will say you’re too small.”

According to the GAO, the most common type of plan offered by small employers is a 401 (K) plan. Yet some smaller plan sponsors surveyed had no idea or didn’t understand the fees they were charged. What’s more, the government study found participants in small plans often pay higher recordkeeping and investment management fees than their larger counterparts.  A $5,000-per-year 401(K) plan may be a drop in the bucket for a large corporation, but for small businesses it can be extremely cost prohibitive.

Even if the small business owner finds a retirement program that will only cost it $1,500 to $2,000 a year, managing the plan is another big challenge the business faces. After all, typically the CEO is busy running the business while the office manager is wearing the hats of multiple people and has little time or experience administrating a plan.

“It becomes a big hassle and too complicated so they don’t offer one,” Meadows says.

Roadblocks to offering a retirement plan of some form abound, but small businesses should seriously consider giving employees a way to save for their future. Not only is it a great way to lure new talent to the company, but it’s also an effective retention tool. With the job market tight for highly skilled workers, small companies should work to provide similar perks to those offered by their larger brethren if they want to see their business grow. 

“If you are just offering the bare minimum like health care they might go look elsewhere,” says Meadows, noting that offering retirement is one of the top three things employees look for in an employer. “Talent is important. It keeps the business going.”

But recruitment and retention aren’t the only reasons to offer a retirement program. According to the Internal Revenue Service small businesses can get a tax credit for starting a plan.

“The first three years you have a 401 (K) plan you can apply for a $500 tax credit,” says Meadows. “If you find a low cost product (the tax credit) can cover one-third of the cost per year for the first three years the company has a 401 (K).”

When it comes to retirement plans, small businesses have options.

According to the IRS, small companies can offer employees an IRA-based plan or a 401 (K).  Many of the IRA plans are easy for the business owner to set up and maintain and don’t cost a fortune to run.  A 401 (K) is going to give employees more options when it comes to investing to save for their future, but the business owner may need the help of their CPA or financial advisor in creating and managing one.  

Either way the business goes, Meadows says you want to find a program that is cost effective and easy to use. You also want to make sure you are aware of all the fees.  

“Part of the problem is the 401 (K) industry is so complicated,” says Meadows.