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.
