What is a Starter 401(k) Plan?
A StarterK is a simple, affordable retirement plan designed to help employees save for the future—especially if your employer is offering a retirement plan for the first time. It was created under the SECURE 2.0 Act to make it easier for companies to support their employees' long-term financial goals. It’s easy to use, automatically helps you start saving, and gives you the flexibility to manage your contributions and investments.
Key Features of a Starter 401(k)
- Automatic enrollment: You’re automatically enrolled, usually at a 5% contribution rate. You can adjust or opt out at any time.
- Employee-only contributions: Your employer does not contribute to your account, but all your contributions go toward your own retirement savings.
- Lower annual limits than a traditional 401(k), but still a great way to build your nest egg.
- Simple and streamlined: Fewer administrative costs and rules for your employer, which makes it easier for smaller companies to offer a retirement plan.
Starter 401(k) vs Traditional 401(k)
| Feature | StarterK | Traditional 401(k) |
| Eligibility | Employers with no current retirement plan | Any eligible employer |
| Employee Contribution Limit (2026) | $6,000 (plus $1,000 catch-up if age 50+) | Under age 50: $24,500 Catch-up Contributions (age 50-59 or 64+): Additional $8,000 Catch-up Contributions (age 60-63): Additional $11,250 |
| Employer Contributions | Not allowed | Optional (matching or non-elective) |
| Auto-Enrollment | Required (3%-15%) | Optional |
| Nondiscrimination Testing | Not required | Required (unless Safe Harbor) |
| Administrative Simplicity | Lower cost and complexity | More complex setup and ongoing administration |
| ERISA Status | Yes, but with streamlined compliance | Yes |
Is My Money Safe and Invested?
Yes, your contributions are invested in a selection of professionally managed investment options—often including target-date funds that adjust risk over time. You can review and update your investment choices through your Vestwell portal.
What if I Leave My Job?
Your StarterK savings are yours to keep. If you leave your employer, you can roll your balance into another retirement account, like a traditional 401(k) or an IRA.
Contribution Limits
In 2026, the annual limit is $6,000 per year. Individuals aged 50 or older can contribute an additional $1,000 as a catch-up contribution.
Note: These limits are lower than those of a traditional 401(k), but the plan is still tax-advantaged and designed to help you get started with saving.
Common Questions:
Can my employer match my contributions?
No. StarterK plans are employee-funded only—employers cannot contribute.
Why was I automatically enrolled?
StarterK plans require automatic enrollment by law, but you can change your contribution rate or opt out at any time.
Can I take out a loan from my StarterK?
In most cases, loans are not available in StarterK plans.