By Shaun Pesce, Retirement Plan Specialist, Signature Bank for Milwaukee Business Journal

When business owners think about 401(k) plans, they often view them as an employee perk—one of those benefits you consider once your company reaches a certain size or maturity. But what many don’t realize is that a 401(k) can be just as advantageous for the owner as it is for their team. It’s more than a recruitment incentive; it’s a strategic tool for building personal wealth, optimizing taxes, and strengthening the business for the long term.

Too often, retirement plans are treated as a line item or a checked box rather than what they truly are: a foundational element of financial leadership. Whether you’re a sole proprietor or leading a growing team, the right 401(k) strategy can benefit both your people and your own future.

The business owner’s blind spot: Misconceptions and missed opportunities

It’s understandable why many small and midsized business owners hesitate to start a 401(k). Concerns about administrative complexity, fiduciary responsibility, and cost often deter action. Others assume they need to be a certain size or revenue level before it's worth it.

But these assumptions often come at a cost. By postponing a retirement plan, owners miss out on personal tax advantages, wealth-building opportunities, and employee goodwill. Contrary to popular belief, even solo business owners can start a 401(k), and many costs can be offset by tax deductions. Today’s retirement plan providers—especially when partnered with a knowledgeable bank—make setup and ongoing management far more approachable than in years past.

A strategic tool for growth and retention

Beyond its financial mechanics, a 401(k) is a powerful strategic tool for any business. In today’s competitive labor market, employees expect more than just a paycheck—they’re actively looking for benefits that support long-term financial security. According to AARP, the U.S. is facing a retirement readiness crisis: one in five Americans has no retirement savings, and nearly half worry they won’t have enough to last through retirement. Retirement benefits are no longer viewed as a “nice to have,” but as one of the easiest and most effective ways to build long-term wealth—making them a critical factor for job seekers evaluating their next move.

For small businesses, this creates a real opportunity. Offering a 401(k) signals stability and a long-term commitment to employee well-being. Meaningful outcomes are more important than just the means to save for retirement. Companies can stand out in industries where wage competition alone may not be enough. This is especially true in skilled labor markets, family-run companies, or businesses relying on multigenerational workforces.

Additionally, 401(k) plans are highly customizable. Employers can structure matching contributions, profit-sharing elements, and vesting schedules to align with company goals—whether that’s improving retention, rewarding tenure, or encouraging long-term thinking.

Personal wealth building for owners

One of the most overlooked aspects of a 401(k) plan is how it benefits the owner directly. With proper plan design, business owners can contribute meaningfully to their own retirement—starting with salary deferrals up to the annual IRS limit and extending to employer contributions that can significantly boost total savings.

Certain plan types are especially favorable for owner participation. Safe Harbor plans eliminate many of the compliance testing hurdles and allow for higher contributions. Solo 401(k)s are ideal for businesses with no employees other than a spouse. Independent law firms, Certified Public Accountants (CPAs), or gig economy professionals can set these up through streamlined processes. Mature businesses might even consider pairing a 401(k) with a cash balance plan to maximize retirement contributions when cash flow is strong.

From a tax planning standpoint, the advantages are substantial. Contributions reduce taxable income, investment gains grow tax-deferred, and plan-related expenses are often deductible business costs. In short, a 401(k) is a practical and powerful financial planning tool—not just a benefit offering.

Getting started isn’t as hard as you think

For many owners, the first step is the hardest. The good news? You don’t have to do it alone.

Setting up a 401(k) plan typically involves a few key steps: assessing your business’s needs, choosing a provider, designing the plan, and communicating it to your team. While fiduciary responsibilities exist, they’re manageable—especially with an experienced partner at your side. Modern plan providers, often in collaboration with banks, wealth advisors, and current payroll providers, can handle the heavy lifting: compliance, filings, participant education, and more.

Choosing the right banking partner: What to look for

The success of your 401(k) program depends largely on the partner you choose. Here are a few qualities to prioritize:

  • Retirement plan expertise – Look for a partner with dedicated specialists who understand not just accounts, but full plan design, long-term strategy, and how to explain provisions in simple terms to employees to help them maximize their benefits.
  • Customization – Can they tailor the plan to fit your specific goals, business size, employee mix, and growth trajectory?
  • Hands-on service – Will they provide proactive guidance beyond initial setup?
  • Compliance support – How do they help you navigate fiduciary duties, annual testing, and IRS filings?
  • Technology + education – Strong partners provide user-friendly tools for plan management and accessible resources for employees.

Choosing the right bank or financial advisor can streamline the process, reduce administrative burden, and ensure your plan evolves alongside your business.

Conclusion: Leading with the long game in mind

Ultimately, a 401(k) is not just about retirement—it’s about leadership, stewardship, and long-term value. It’s a move that signals confidence in your business’s future and a commitment to your team and yourself.

The sooner business owners take the first step, the greater the impact. Whether you’re just starting out or preparing for succession, a well-structured 401(k) can be a cornerstone of your strategy. And with the right banking partner, it’s easier than you think.

Every business is different—and so is every retirement plan. Connect with Signature Bank to find the right fit for your company and your future.

Shaun Pesce is a retirement services expert at Signature Bank. He advises clients on strategies pertaining to investments, asset allocation, 401(k), 403(b), 457, Non- qualified, Cash Balance, Defined Benefit, and retirement income. Contact Shaun at spesce@signaturebank.bank.