Small-business 401(k) adoption jumps 64% since 2019, Gusto finds

Seven years after the SECURE Act became law, a fresh accounting of its effect on small-business retirement plans is in: adoption is up 64%. The share of small businesses offering a plan rose from 19% in 2019 to 31% in 2026, according to research by Gusto economists using administrative payroll data. 401(k) Specialist reports the findings, which credit the SECURE Act of 2019 and SECURE 2.0 of 2022, along with state mandates and labor-market pressure.

The data comes from Gusto's payroll records, so it measures active plan use rather than employer intentions. That makes it a direct test of whether the law's incentives changed behavior. The evidence says they did, but the change is not uniform.

Hourly workers moved first and gained the most ground. Their access to a workplace plan rose 79%, from 21% to 38%, while salaried access grew 24%. The share of hourly employees actually contributing through work more than doubled, from 7% to 17%. Access is turning into behavior, at least in this data.

The report attributes the greatest growth to hospitality, recreation and agriculture — restaurants, hotels, salons and farms. The share of small hospitality businesses with an active plan tripled, from 4% to 12%, a 200% increase. Recreation rose 147%. White-collar sectors still lead: professional services, finance and information are approaching 45% adoption.

The report credits both the federal incentives and state mandates without dividing credit between them. Some of the coverage expansion may reflect state requirements rather than SECURE tax credits. The distinction matters for policy, but the outcome for an hourly restaurant worker is the same: a way to save at work.

The composition of the new plans matters more than the headline. These are businesses where payroll is small, hourly and seasonal, and where a 401(k) is a new concept for most employees. A restaurant runs a plan differently from an engineering firm. The plans will carry lower average balances, more enrollment events and participants who need retirement literacy before they need performance attribution. The firms that treat these plans as a volume business, not a relationship business, will find the math easier.

For advisory firms, the economics of this segment are unfamiliar. Account balances are small, the administrative burden is the same, and participants usually engage once a year. The plan sponsor is the buyer; the participant is the silent user. The firms that treat these plans as a front door to future wealth — with auto-enrollment, target-date funds and financial wellness tools — will build the sticky relationships. Copying the white-collar playbook will not work.

For an RIA principal, the useful numbers are not the 64% headline but the 200% jump in hospitality and the 147% in recreation. Those are plan sponsors who are new to retirement plans, and the report does not say how many of them have advisor relationships. The companies that crack the service model for this segment — small balances, hourly workers, seasonal workloads — will create the next client base. The firms that wait for account size to reach their minimums will watch the market pass them by.

The report's authors are careful about their conclusion: 'These patterns suggest that expanded coverage is reaching the workers who have historically been least likely to have it.' They are right to be careful. Even after the gains, only 31% of small businesses offer a plan, and hospitality sits at 12% — roughly a quarter of the white-collar rate. The gap has narrowed, not closed.

The next few years will test whether access becomes savings. Participation among hourly workers more than doubled, from 7% to 17%, which is the hopeful sign. But plans written for salaried professionals do not automatically fit shift workers. The plan designs, recordkeeping and advice built for a law firm need rethinking for a restaurant. If the new plans are built with hourly workers in mind — auto-enrollment, small-account pricing, education at onboarding — the SECURE Act's promise lands. If they are not, the adoption numbers will flatten and the gap will persist. None of that shows up in the current data; it is the next report's job.