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Benefits May 1, 2013
Small Business Retirement Plans Survived Recession
May 1, 2013 (PLANSPONSOR.com) – A six-year analysis of small businesses’ retirement plans by Fidelity Investments shows both sponsor and participant commitment during the recession.
Reported by Rebecca Moore
The analysis of more than 200,000 small business accounts that utilize a Simplified Employee Pension Plan (SEP-IRA), Self-Employed 401(k) or Savings Incentive Match Plan for Employees (SIMPLE-IRA) with Fidelity shows average balances in these plans increased 20% since 2007, and jumped an average of 64% since 2008 when balances were generally at their lowest point.
The average contribution to these retirement savings accounts increased across the board since 2007, with those using Self-Employed 401(k)s showing the largest increase of 21% to $20,950. Employer contributions to SEP-IRAs increased 14% from 2007, reaching $13,250 in at the end of 2012, while average employer/employee contributions to SIMPLE-IRAs increased the least, rising 4% to $6,000.
As a result of the increased contributions and market rebound, average balances also have grown since 2007. The average balance of Self-Employed 401(k) plans rose from $103,400 in 2007 to $119,500 in 2012—a 16% increase over six years—signaling a strong rebound for small business owners who are using retirement plans for savings purposes. SEP-IRA and SIMPLE-IRA balances also increased by 17% to $71,300 and 26% to $31,100, respectively.