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Small Business 401(k)

Q: What types of businesses can set up a Small Business 401(k)?

Corporations, partnerships and nonprofit organizations can establish Merrill Small Business 401(k) plans. If you're self employed or a sole proprietor, you may want to consider an Individual 401(k) .

Q: What are the potential tax benefits of a 401(k)?

Employer contributions are deductible by the business. Participant pre-tax contributions and earnings aren't taxed until they're withdrawn. For more information, read the guide to tax benefits (PDF) .

Q: How much can employers contribute annually?

Employers may match employee salary deferrals. Employers may make a profit sharing contribution for each eligible employee of up to the lesser of 25% of compensation or $61,000 for 2022. The maximum compensation on which contributions can be based is $305,000 for 2022.

Q: How much can employees contribute annually?

Employees may contribute up to $20,500 in 2022, or $27,000 for those 50 and older. The maximum combined employer and employee contribution is the lesser of 100% of compensation or $61,000 for 2022 (for those age 50 and older, $67,500) per participating employee.

Q: Does my business have to contribute to employee accounts?

It depends on the plan you select. Some plans don't require employer contributions. Others, such as safe harbor plans, do require a minimum contribution.

Q: What is a safe harbor plan?

Safe harbor plans automatically satisfy certain IRS nondiscrimination testing requirements. This plan type is designed to assure that your 401(k) plan is fair for all employees. With a safe harbor plan, employers are required to make contributions to employees' accounts, but there is some flexibility as to how they are made. For more information, read the guide to safe harbor plans (PDF) .

Q: How much does it cost to set up and administer a Small Business 401(k) for my company?

There is a one-time setup fee of $390 for new plans and $390 for converting an existing 401(k) plan to Merrill. Once the plan is set up, the monthly administration fee is $90.

Q: What is the difference between Roth and pre-tax contributions?

The difference between Roth (after-tax) and pre-tax contributions is when you pay taxes. With Roth contributions, you make contributions with after-tax dollars. Once the account has been open for 5 years, future withdrawals of both contributions and earnings are tax free unless you withdraw prior to age 59�. With pre-tax contributions, you get a tax break now, reducing your current taxable income. Contributions and earnings grow taxdeferred until withdrawn in retirement. Each offers different tax advantages. For more information, read the tax benefits fact sheet (PDF) .

Q: When are contributions fully vested?

Employee contributions vest immediately. Employer contributions may vest over time according to the terms of the plan selected, but employer safe harbor contributions vest immediately.

Q: What investment choices are offered?

You can choose from funds and/or model portfolios selected by Morningstar Investment Management LLC. Participants also have access to educational call center support from Plan Administrators, Inc. (PAi) and a suite of online investor-education resources.

Give your business an edge with competitive retirement benefits

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A Small Business 401(k) is a streamlined and affordable retirement plan designed with small business owners and their employees in mind.

Small Business 401(k) Features

Enjoy contribution limits 3 times higher than that of a traditional IRAFootnote ¹

Make contributions that are generally tax deductible by the businessFootnote ²

Take the guesswork out of investing with a menu of funds and model portfoliosFootnotes ^3,4

Reduce your admin with a plan that's straight forward and easy to manage

74% of employees say that investing in their 401(k) and other accounts will help them build a nest egg.Footnote ⁵

Request a 401(k) proposal popup

Discover affordable and straightforward pricing

Pricing for your businessFootnote ⁶

One-time set up feeFootnote *:

$390

Monthly administration:

$90

Footnote *Setup fee is non-refundable

Pricing for individuals with a balanceFootnote ⁷

Monthly recordkeeping fees:

$4.00

Annual asset based costsFootnote ^†:

0.52%

Footnote ^† For investment fiduciary services (0.07%), participant servicing through the call center (0.20%) and account services for the ongoing product management, vendor oversight, trading and custodial services (0.25%).Footnotes ^3,4

Fees example: Sue has $10,000 in her account. This year, she will have approximately $52 withheld to cover the asset-based fee and $48 ($4 x 12 months) for recordkeeping fees.

What's a key difference between a Small Business 401(k) and a SIMPLE IRA?

Any type of employer regardless of their business size can open a Small Business 401(k) plan, while a SIMPLE IRA is designed for businesses with 100 or fewer employees.

Learn more about all small business solutions available at Merrill

Get started with a Small Business 401(k) in 3 easy steps

Answer a few questions

Tell us about yourself and your business, and we'll customize a plan to fit your needs.

Review your proposal

We'll send you a proposal for your review. If you want, you can modify plan features before purchasing.

Purchase your plan

After reviewing your proposal, you can purchase your plan online in just a few minutes.

Request a 401(k) proposal popup

Need help? Speak with a PAi consultant for step-by-step guidance.
Call 866.890.4177 Mon-Fri 8 a.m. – 5 p.m.

Explore all plans available for small business

Get more details about small business retirement plans available at Merrill and find the one that works best for your needs.

SEP IRA plans at Merrill SIMPLE IRA plans at Merrill Individual 401(k) plans at Merrill

Interested in getting more details on self-employed retirement plans?

Compare a Small Business 401(k), a SIMPLE IRA and a SEP IRA at Merrill.

Frequently Asked Questions

Expand all

What types of businesses can set up a Small Business 401(k)?

What are the potential tax benefits of a 401(k)?

How much can employers contribute annually?

Depending on the plan's terms, employers may match employee salary deferrals and/or make profit sharing contributions for eligible employees. An employer's contribution cannot exceed 25% of the employee's compensation (if you are self-employed, 20% of your net earnings from self-employment). Also, the maximum combined employer and employee contribution is the lesser of 100% of compensation or $66,000 for 2023Footnote ⁹ (excluding catch-up contributions for those age 50 and older). The maximum compensation on which these contributions can be based is $330,000 for 2023.Footnote ²

How much can employees contribute annually?

Does my business have to contribute to employee accounts?

What is a safe harbor plan?

Safe harbor plans automatically satisfy certain tax law nondiscrimination testing requirements. This plan type is designed to assure that your 401(k) plan is fair for all employees. With a safe harbor plan, employers are required to make contributions to employees' accounts, but there is some flexibility as to how they are made. For more information, read the guide to safe harbor plans (PDF).

How much does it cost to set up and administer a Small Business 401(k) for my company?

What is the difference between Roth and pre-tax contributions?

With Roth contributions, you make contributions with after-tax dollars. Earnings are free from federal taxes if you take a qualified distribution. A "qualified distribution" is one that is taken at least five years after the first day of the year of your initial Roth contribution, or Roth conversion, if earlier, and after you have reached age 59½ or become disabled or deceased. If you take a nonqualified withdrawal, any investment earnings on the Roth contributions are subject to regular income taxes, and you may be subject to a 10 percent additional federal tax if you withdraw such earnings before age 59½ unless an exception applies. State income tax laws vary; consult a tax professional to determine how your state treats Roth distributions.

With pre-tax contributions, you get a tax break now, reducing your current taxable income. Taxes on contribution and earnings are due upon withdrawal.

Each offers different potential tax advantages. For more information, read the tax benefits fact sheet (PDF).

When are contributions fully vested?

What investment choices are offered?

Can participants withdraw funds or take loans from their 401(k)s?

What is the plan establishment deadline?

The deadline to establish a new plan depends on the type of plan you want to adopt and the type of contributions you want to be available for the first plan year. If you want employees to be able to make contributions, you will generally want to allow enough time for them to do so before the plan year ends. However, if you want to adopt a safe harbor plan, your deadline to establish the plan is October 1 of the plan year assuming you establish a calendar year plan, but you will need to send a notice to participants at least 30 days before that.

To adopt a non-safe harbor 401(k) plan, the deadline is the tax filing deadline (including extensions) for your business. However, only a profit sharing contribution could be made retroactively for the first plan year if you wait until the next tax year to adopt the plan.

Is IRS reporting required?

Footnote

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

Footnote ¹ Contribution limits apply for 2023, per tax law cost-of-living adjustment. Amounts for subsequent years may vary.

Footnote ² Contribution and compensation limits are subject to a cost-of-living adjustment annually pursuant to the Internal Revenue Code. Contribution and compensation limits for subsequent years may vary. For more information visit the IRS website popup. You should talk to your legal and/or tax advisors before making any financial decisions.

Footnote ³ Plan- and participant-level administrative and recordkeeping services for Merrill Small Business 401(k) plans are provided by Plan Administrators, Inc. (PAi). Investment advisory and fiduciary services are provided by Morningstar Investment Management LLC, a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. Morningstar Investment Management LLC is a provider of investment management solutions, including investment advisory and retirement plan services. Educational call center support will be provided by PAi. Bank of America Corporation, PAi and Morningstar Investment Management LLC are not affiliated.

Footnote ⁴ Morningstar Investment Management LLC selects the investments and is responsible for the ongoing monitoring and maintenance of the investments and model portfolios. Merrill is responsible for ongoing product management and vendor oversight, as well as trading and custodial services of plan assets and monthly transaction statements.

Footnote ⁵ Learn more from the 2022 Bank of America Workplace Benefits report (PDF).

Footnote ⁶ Fees will be deducted from the business account.

Footnote ⁷ Fees will be deducted from each participant's account.

Footnote ⁸ Please consider the advantages and disadvantages of taking a loan before initiating one.

Footnote ⁹ While you can contribute a profit sharing contribution up to 100% of an employee's eligible compensation, you can only deduct up to 25%.

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Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.

Asset allocation, diversification, and rebalancing do not ensure a profit or protect against loss in declining markets.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

This material is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory (including financial planning) and other services. Additional information is available in our Client Relationship Summary (PDF).

Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as "MLPF&S" or "Merrill") makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation ("BofA Corp."). MLPF&S is a registered broker-dealer, registered investment adviser, Member Securities Investor Protection (SIPC) popup and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp").

Merrill Lynch Life Agency Inc. (MLLA) is a licensed insurance agency and wholly owned subsidiary of BofA Corp.

Banking products are provided by Bank of America, N.A. and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation.

Investment products offered through MLPF&S and insurance and annuity products offered through MLLA:

Are Not FDIC Insured	Are Not Bank Guaranteed	May Lose Value
Are Not Deposits	Are Not Insured by Any Federal Government Agency	Are Not a Condition to Any Banking Service or Activity

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Other fees may apply. Free and $0 means there is no commission charged for these trades. $0 option trades are subject to a $0.65 per-contract fee. Sales are subject to a transaction fee of between $0.01 and $0.03 per $1,000 of principal. There are costs associated with owning ETFs. To learn more about Merrill pricing, visit our Pricing page.

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Merrill waives its commissions for all online stock, ETF and option trades placed in a Merrill Edge^® Self-Directed brokerage account. Brokerage fees associated with, but not limited to, margin transactions, special stock registration/gifting, account transfer and processing and termination apply. $0 option trades are subject to a $0.65 per-contract fee. Other fees and restrictions may apply. Pricing is subject to change without advance notice.

Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.

Asset allocation, diversification, and rebalancing do not ensure a profit or protect against loss in declining markets.

The performance data contained herein represents past performance which does not guarantee future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. For performance information current to the most recent month end, please contact us.

Net Asset Value (NAV) returns are based on the prior-day closing NAV value at 4 p.m. ET. NAV returns assume the reinvestment of all dividend and capital gain distributions at NAV when paid.

Market price returns are based on the prior-day closing market price, which is the average of the midpoint bid-ask prices at 4 p.m. ET. Market price returns do not represent the returns an investor would receive if shares were traded at other times.

Returns include fees and applicable loads. Since Inception returns are provided for funds with less than 10 years of history and are as of the fund's inception date. 10 year returns are provided for funds with greater than 10 years of history.

Before investing consider carefully the investment objectives, risks, and charges and expenses of the fund, including management fees, other expenses and special risks. This and other information may be found in each fund's prospectus or summary prospectus, if available. Always read the prospectus or summary prospectus carefully before you invest or send money. Prospectuses can be obtained by contacting us.

Expense Ratio – Gross Expense Ratio is the total annual operating expense (before waivers or reimbursements) from the fund's most recent prospectus. You should also review the fund's detailed annual fund operating expenses which are provided in the fund's prospectus.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

Banking products are provided by Bank of America, N.A. and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation ("BofA Corp.").

Merrill Lynch Life Agency Inc. (MLLA) is a licensed insurance agency and wholly owned subsidiary of BofA Corp.

Investment products offered through MLPF&S and insurance and annuity products offered through MLLA:

Are Not FDIC Insured

Are Not Bank Guaranteed

May Lose Value

Are Not Deposits

Are Not Insured by Any Federal Government Agency

Are Not a Condition to Any Banking Service or Activity

Merrill A Bank of America Company Merrill A Bank of America Company

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Small Business 401(k)

Give your business an edge with competitive retirement benefits

A Small Business 401(k) is a streamlined and affordable retirement plan designed with small business owners and their employees in mind.

Small Business 401(k) Features

Discover affordable and straightforward pricing

Pricing for your businessFootnote 6

Pricing for individuals with a balanceFootnote 7

What's a key difference between a Small Business 401(k) and a SIMPLE IRA?

Get started with a Small Business 401(k) in 3 easy steps

Answer a few questions

Review your proposal

Purchase your plan

Explore all plans available for small business

Frequently Asked Questions

I'd Like to

Discover Merrill

Contact Us

Unlimited $0 Trades

Pricing for your businessFootnote ⁶

Pricing for individuals with a balanceFootnote ⁷