Short answer: If you have employees, a small business 401(k) with Fidelity is a plan you adopt as the employer. You pick the plan design (traditional or safe harbor), Fidelity or its partners handle recordkeeping, and you stay responsible as the plan sponsor. Costs vary by plan size and design, so request a written quote. New SECURE 2.0 tax credits can offset much of the first-year cost for employers with 100 or fewer employees: up to $5,000 a year of startup costs for employers with 50 or fewer employees, up to $1,000 per employee in employer contributions, and $500 for adding auto-enrollment. If you are the only employee, see our Fidelity Solo 401(k) guide instead.
Is a 401(k) Right for Your Small Business?
| Your situation | Plan to look at first |
|---|---|
| Just you (and maybe a spouse) | Solo 401(k) or SEP-IRA |
| A few employees, want lowest cost and simplest rules | SIMPLE IRA |
| Want high limits and Roth options, willing to run a plan | Traditional 401(k) |
| Want to skip annual testing and give owners full limits | Safe harbor 401(k) |
A 401(k) offers the highest contribution limits of the common small business plans, but it comes with plan administration, annual filings and fiduciary responsibilities. Talk to a tax professional or plan advisor before you choose.
Traditional vs. Safe Harbor 401(k)
- Traditional 401(k): Employees defer part of their pay, and you may add a match or profit sharing. Each year the plan must pass nondiscrimination tests. If higher-paid employees save much more than lower-paid ones, they may have to take money back or you may have to contribute more.
- Safe harbor 401(k): You make a required employer contribution (a match or a contribution for everyone), which lets the plan skip most of that testing. Employees are fully vested in safe harbor contributions in a basic design.
- Roth and catch-ups: You can usually add Roth deferrals and catch-up contributions to either design if the plan documents allow them. See our contribution limits guide for the 2026 figures: $24,500 deferral, $8,000 catch-up, $72,000 combined.
What Does a Small Business 401(k) Cost?
Fidelity does not publish one flat price for every employer, so ask for a written fee quote for your headcount. In general, costs fall into these buckets:
- Setup: a one-time fee, commonly in the hundreds to a few thousand dollars across providers. Some providers waive it.
- Annual administration: recordkeeping, compliance testing and Form 5500 preparation. These can add up to a few hundred dollars to more than a thousand dollars a year on top of other fees at smaller plans.
- Per-participant fees: a per-employee charge at some providers.
- Investment fees: fund expense ratios, usually paid by employees from their balances.
- Service fees: for loans, hardship withdrawals or distributions, often paid by participants.
Questions to ask in any quote: Which fees do I pay and which do participants pay? Are there asset-based fees? Is there a fee if I change plan design or leave? Are fund menu costs included? Our guide to the record-keeping fee explains how plan fees can show up on participant statements.
SECURE 2.0 Tax Credits for Starting a Plan
These credits can make the first years of a new plan much cheaper. The rules below come from the IRS; confirm eligibility and claim the credits with your tax professional.
| Credit | Who qualifies | Amount |
|---|---|---|
| Startup cost credit | Employers with 100 or fewer employees who earned at least $5,000 the prior year | 100% of eligible startup costs if you have 50 or fewer employees, 50% if you have 51 to 100. Annual cap is the lesser of $5,000 or $250 times the number of eligible non-highly compensated employees (minimum $500). Available for three years. |
| Employer contribution credit | Same size limits, for contributions to employees not above the pay cap | Up to $1,000 per participant. 100% of contributions in years 1 and 2, then 75%, 50% and 25%. Reduced by 2 percentage points per employee over 50 for employers with 51 to 100 employees. |
| Auto-enrollment credit | New or existing plans that add an eligible auto-enrollment feature | $500 a year for three years |
Example: A business with 10 employees, 8 of whom are non-highly compensated and eligible, adds a safe harbor match and automatic enrollment. In year one it could claim up to $2,000 of startup credit ($250 times 8), up to $1,000 per eligible participant in employer contributions (up to $8,000 if it contributes at least $1,000 for each of 8 employees), and the $500 auto-enrollment credit. That is up to $10,500 in year one. Your actual credit depends on your costs, contributions and pay limits.
Claim the credits on IRS Form 8881 (startup and auto-enrollment) and through the general business credit for employer contributions. You cannot deduct the same costs you claim as a credit.
Automatic Enrollment Rules for New Plans
Under SECURE 2.0, most new 401(k) plans set up after December 29, 2022 must automatically enroll eligible employees starting with plan years that begin after December 31, 2024, at a rate of at least 3% and not more than 10%, rising by 1 percentage point a year to at least 10% (up to 15%). Exceptions include businesses with 10 or fewer employees, businesses less than three years old, and some church and governmental plans. Check how this affects your plan design.
How to Set Up a Small Business 401(k) With Fidelity
- Decide the plan design. Traditional or safe harbor, whether to offer a match, Roth deferrals and auto-enrollment.
- Gather your information. Employee census (pay, hire dates, ages), business tax ID and ownership details.
- Request a quote from Fidelity. Use the small business retirement section of fidelity.com, or ask your payroll provider or advisor if they sell Fidelity plans. Compare at least two other providers.
- Sign the plan documents. The adoption agreement and trust documents define the plan. Keep copies.
- Connect payroll. Contributions are deducted from pay and deposited promptly. Late deposits are a compliance problem.
- Tell your employees. Give them the plan summary, enrollment instructions and the notices the plan requires.
- Calendar your annual tasks. Nondiscrimination testing, Form 5500 filing, notices, and any match or profit-sharing deposits.
Only use phone numbers and forms from fidelity.com or your own account. Search results for these topics are full of fake “support” numbers.
Your Responsibilities as the Plan Sponsor
- Act in the best interest of participants (fiduciary duty), including choosing and monitoring plan providers and investments.
- Deposit employee deferrals as soon as they can reasonably be separated from pay.
- File Form 5500 each year and provide required notices.
- Keep plan documents current and follow them.
You can hire an advisor, third-party administrator or fiduciary service to take on parts of this. Ask about what they cover and what stays with you.
Frequently Asked Questions
Does Fidelity offer a 401(k) for small businesses?
Yes. Fidelity offers 401(k) plans for small employers and has a small business retirement plan contribution calculator on its website. Ask for a quote for your size and design.
How much does a Fidelity small business 401(k) cost?
It depends on your plan design and number of employees. Request a written fee schedule that shows setup, annual and per-participant costs.
Can I get a tax credit for starting a 401(k)?
Often yes. Employers with 100 or fewer employees may qualify for a startup cost credit of up to $5,000 a year for three years, an employer contribution credit of up to $1,000 per participant, and a $500 auto-enrollment credit. See the table above.
Do I have to offer a match?
No, unless you choose a safe harbor design, which requires an employer contribution. Many small plans start with a match to attract participation.
What if I am the only employee?
Look at a solo 401(k), which has lower administrative burden for owner-only businesses.
Can employees roll old 401(k)s into our plan?
If the plan allows rollovers in. That is a plan design choice. See our rollover guide for how employees move money.
UseFidelity.com is an independent site and is not affiliated with Fidelity Investments. This article is general information, not tax, legal or investment advice. Figures last checked 3 November 2026.
Sources
- IRS: Retirement plans startup costs tax credit
- Human Interest: How much does a 401(k) cost employers
- IRS Notice 2025-67 (2026 contribution limits)