Having a retirement plan is one of the most effective ways to reduce financial stress and feelings of fragility for workers. But there’s a structural problem: Most small and mid-sized businesses can’t offer a 401(k) because it’s too expensive, too complex, and too burdensome to administer.
Morningstar’s long-term analysis makes the issue impossible to ignore: Nearly 80% of small 401(k) plans shut down over a 10-year period due to cost and complexity.
The system is simply not built for SMBs — and workers pay the price.
At the same time, financial pressure on employees is rising fast. New research from The Harris Poll shows that even high earners are feeling strained — with one in three six-figure earners saying they’re stretched or drowning financially, and many feeling “one unexpected bill away from chaos.” In this environment, retirement benefits matter more than ever. But the legacy 401(k) system is failing both employers and employees.
The 401(k) Has a Design Problem — And Employees Are Paying for It
The Wall Street Journal recently highlighted a major flaw: workers lose investment growth simply because they switch jobs.
Here’s what happens today:
When an employee leaves with a small 401(k) balance, employers can force-roll the money into a low-yield IRA.
These “safe harbor IRAs” often earn less in interest than they charge in fees.
EBRI estimates they hold $28B today, growing to $43B by 2030 — money sitting idle instead of compounding.
This isn’t employee mismanagement. This is a design flaw in the employer-sponsored system — a system built for 1978, not 2025.
Employees Need Stability. Employers Need Simplicity. The 401(k) Offers Neither.
Today’s workforce is:
financially stressed
mobile
digitally fluent
and seeking benefits that actually support their financial lives
But the 401(k) creates friction at every job change, piles administrative work on employers, and is simply too costly for many SMBs to sustain.
That’s why so many plans shut down. And it’s why employers are looking for a better alternative.
The PRP by Icon: A Simpler, Modern Retirement Benefit
The PRP is built for the realities of today’s workforce and today’s employers.
1. Half the cost of a 401(k)
No plan sponsor liability. No plan testing. No administrative burden.
2. Lower participant fees
Workers keep more of what they save — critical in a time when even six-figure earners feel squeezed.
3. A plan that follows the person, not the employer
Employees keep the same account and investments across jobs. No forced rollovers. No stranded savings. No lost compounding.
4. Seamless and easy to use
Modern, digital, fast — designed for workers who manage their lives on their phones, not through paperwork packets.
The takeaway for employers
Offering a retirement plan shouldn’t require legal exposure, high costs, or a full-time administrator. And your employees shouldn’t lose money simply because they changed jobs.
The PRP by Icon gives employers a low-cost, low-burden way to offer a benefit that actually strengthens financial stability — without inheriting the problems baked into the old system.
Affordable. Portable. Modern. A retirement benefit finally built for the world we live in today.
Contact an Icon Retirement Specialist today to learn more.
Choosing the best 401k for your small business can be overwhelming. Between fiduciary risks, compliance, and hidden fees, many small business owners are now exploring simpler, low-cost retirement alternatives.
What Makes 401k Plans Expensive for Small Businesses?
Even the best 401k plans can create challenges for businesses:
You become the plan sponsor. You’re responsible for compliance, filings, and fiduciary liability. Most businesses don’t realize they hold the fiduciary responsibility and legal risks.
Costs stack up. Monthly fees, per-employee charges, and required employer match add up fast.
Setup is complex. Paperwork, plan design, and IRS filings slow things down.
Ongoing compliance is heavy. Annual testing, government filings, and possible audits create risk.
Employees face rollovers. When they leave, accounts may be cashed out, lost, or forgotten.
Key Questions Before Choosing a 401k for Your Small Business
Who handles compliance and testing?
What happens if your workforce grows or shrinks?
Can you afford a required match for every eligible employee?
What is the true long-term cost in money and time?
The Alternative: Icon’s Portable Retirement Plan (PRP)
Instead of sponsoring a 401k, many small businesses now choose the PRP — a fully managed, low-cost retirement plan designed for today’s workforce.
No fiduciary responsibility. No plan sponsorship burden risk.
No filings or audits. No ERISA requirements or government paperwork.
Affordable and simple. One flat monthly fee, no required match.
Works for all types of workers. W-2, 1099, part-time, and full-time.
Fully portable. Employees keep their account even when they leave.
Compare: PRP vs 401k
Feature
Icon PRP
401k Plan
Employer role
No sponsorship or fiduciary duty
You’re the sponsor and fiduciary
Setup
Fully digital, ~30 minutes
Paperwork-heavy, slow
Compliance
No filings or audits
Annual filings and testing
Cost
Flat monthly fee
Monthly, per-employee, plus match
Eligible workers
W-2, 1099, part-time, full-time
W-2 only
Portability
Employees keep their account
Rollovers required when they leave
Why Small Businesses Choose the PRP
✅ No legal or fiduciary burden ✅ No filings or ERISA compliance ✅ Low-cost, no required match ✅ Flexible for any workforce ✅ Employees keep their retirement savings
The Best 401k for Small Business? Here’s the Bottom Line.
If you’re looking for the best retirement plan for your employees, consider this:
What if the right plan for your business isn’t a 401k at all?
The PRP may offer a simpler, more affordable way to help employees save — without the headaches of a 401k.
Businesses should consider their needs and look for a plan that suits them. Be sure to consider 401k alternatives and look at the plan cost, complexity, and compliance requirements.
What makes the PRP easy to use?
The PRP takes the headaches out of offering a retirement benefit. There’s no required match, no annual testing or audits, and no compliance maze to navigate. It’s simple to set up, easy to manage, and designed to work for your business—not against it.
Is the PRP portable?
Yes. With the PRP, employees keep their retirement savings when they leave—no paperwork, no abandoned accounts. It’s their plan, not the company’s. That means you’re giving them something that actually supports their future.
California law currently requires all employers with 5 or more employees to offer a retirement plan.
The deadline to comply was June 2022.
Starting in 2025, employers with 1 or more employees will have to offer a retirement plan.
The state can impose fines of up to $750 per employee for failure to comply.
To comply, employers can offer a retirement plan through a provider of their choice, or use the state-run plan.
This guide will help you understand what CalSavers is and who it applies to, along with what you need to do to comply.
What is a The Retirement Mandate law in California?
California law makes it mandatory for employers with 5 or more employees to provide a retirement savings plan to their employees. The deadline was June 2022, and employers not complying are subject to fines. Starting in 2025, this law will apply to any employer with at least one employee in California. The law is meant to help combat the retirement savings crisis prevalent in the state, where nearly half of private sector employees lack access to retirement plans at their workplace.
What is CalSavers?
CalSavers is the name of the state-run retirement plan. It was designed to provide a retirement savings option for employers that don’t offer a retirement plan and don’t want to offer a plan through a retirement plan provider. The program is funded by employee contributions, which are deducted automatically from their paychecks. CalSavers is a payroll deduction Roth IRA, which means contributions are made post-tax.
How Does CalSavers Work?
As an employer using CalSavers, you’ll have some steps to take to get started along with ongoing responsibilities. After you register for CalSavers, you’ll need to upload your roster of eligible employees. Then, your role in the CalSavers program is to facilitate your employees’ contributions. This means you’ll need to deduct the contributions from your employees’ paychecks and send them to CalSavers. You’ll also need to manage your employees’ enrollment in the program, including tracking who’s participating and who’s opted out.
Remember, you’ll have the ongoing responsibility of keeping your account current. This means you need to update employee contribution rates when employees make changes, add new employees within 30 days of their hiring or when they become eligible, and mark employees as inactive if they leave or are terminated. Additionally, you’ll continue to process payroll contributions for participating employees.
Who Needs to Comply with CalSavers?
If you’re an employer with 5 or more employees in California and you don’t already offer a retirement plan, you’ll need to register with CalSavers or offer a retirement plan through a provider of your choice. If you don’t, you could face steep penalties. The penalties for non-compliance start at $250 per employee and can go up to $750 per employee.
CalSavers compared to 401k plans and PRPs
CalSavers is not your only choice when it comes to offering a compliant retirement benefit. The two other plan types that comply with the mandate are a 401k and a PRP.
The familiar 401k plan was created to replace pension plans at large companies. It allows employees to contribute a portion of their income, pre-tax, into a retirement account. Many small businesses find that the 401k is cost-prohibitive and that they don’t have the resources to manage them. As an employer sponsoring a 401k plan, you become a fiduciary to your employees and can be sued if you don’t act in the best interest of the plan participants.
PRPs (Portable Retirement Plans) are a new type of retirement plan offered by Icon. PRPs work like a 401k but without the high cost, regulatory complexity, and fiduciary burden. Both 401k plans and PRPs offer tax-advantaged savings and automatic payroll contributions, but PRPs have some big advantages:
No federal filings or reporting
No fiduciary burden
Flat monthly cost, predictable pricing
No rollover required
No ERISA bond
The PRP by Icon is an easy and affordable way to meet the California mandate. With a PRP you can meet the California retirement mandate and provide your employees with a valuable retirement savings plan without the hassle and complexity of 401k plans.
Frequently Asked Questions
1. How can I ensure I’m in compliance with the California retirement mandate?
To ensure you’re in compliance with the mandate, you can either offer a qualifying retirement plan (like the PRP by Icon) or register to facilitate CalSavers. If you choose to offer a PRP, we’ll provide the documentation you need to show you’re in compliance.
2. How does the PRP compare to CalSavers?
PRPs by Icon are fully automated, removing the administrative burden from employers. You can set up your plan in minutes, and we integrate with your banking and payroll partners. Once you launch your plan, we handle the rest, including employee enrollment and communications. You’ll get access to your employer dashboard so that you can easily review and monitor your plan.
CalSavers offers a limited number of investment options. With Icon, employees get a portfolio tailored to their needs, giving them a more personalized plan that is managed for them. Plus, while CalSavers may not cost employers any money, the fees charged to employees are higher and the employer will spend their time with the ongoing responsibilities of managing CalSavers.
3. How can I get started with Icon?
Getting started with Icon is easy. Just visit our website, click on “Get Started,” and follow the prompts to set up your plan. We’ll guide you through the process and provide all the support you need. Signing up only takes about 5 minutes.
4. What if I already offer a retirement plan to my employees?
If you already offer a retirement plan, you can still switch to Icon – it’s easy, and we’ll help you make the change
5. What are the benefits of offering a retirement plan to my employees?
Offering a retirement plan can help attract and retain top talent, improve employee satisfaction, and provide a tax-advantaged way for your employees to save for retirement.
6. How can I educate my employees about retirement savings?
If you choose Icon’s PRPs, we provide educational resources and support to help your employees understand their retirement savings options. Educating your employees about retirement savings is important for their financial future.
7. What if my business grows and I have more employees?
With Icon, we scale with you. Whether you have 5 employees or 500, we make it easy to offer a retirement plan.
Get in Touch
We’re here to help! If you have any questions or need a hand navigating your retirement plan options, don’t hesitate to get in touch with us. We’re here to help you find the best solution for your business.
