December 31 is the last day for small business owners to open and start funding a 401(k) plan, and there are many tax benefits in a 401(k) that accountants should discuss with their business clients before the year is over.

Retirement plans can help business owners save for their own retirement, reduce their income taxes, and attract and retain workers by offering more competitive benefits.

“If you think about the December 31 date, there are really two big things to think about,” said Joe DeSilva, general manager and senior vice president of retirement services at ADP. “The first, from a plan sponsor perspective, is to consider adding a 401(k) plan to the company’s benefit package. It’s not going to benefit them in 2015, but it gives them a jump start on 2016 for business owners themselves to be able to save on a pre-tax basis, and to have a benefit offering to attract and retain talent. The sooner they can get it out there and have a full-year offering, the better the tax advantages they have to attract and retain talent. The other thing I would say, from the participant perspective, is making sure they maximize their contributions for the year.”

This year, 395,000 participants enrolled in a 401(k) plan from payroll giant ADP. In 2016, the maximum contribution to a 401(k) will be $18,000, according to the Internal Revenue Service, or $24,000 for people at or over the age of 50. Business owners should remind their employees of the annual contribution maximums, since some employees may decide to make last-minute deferral increases or max out their savings limits for the year. Letting them know about the plan limits can help them reduce their personal income taxes and put away more money for the future.

DeSilva noted that new plans also get a $500 tax credit for administration costs, and they can deduct contributions as a business expense.

He sees an uptick in interest in retirement plans like the 401(k). “It’s a hot topic right now,” said DeSilva. “You’ve got more and more focus from the federal government. People have to think about what their costs in retirement are going to be, i.e., in health care. Do you have enough saved?”

Automatic enrollment and auto increase policies are becoming more common in companies as they seek to sign up more employees for the plans. More employers are also offering target date funds to help employees save with an eye toward the date when they expect to retire. As the Federal Reserve moves to increase interest rates in the coming year, 401(k) plans can provide a good vehicle to save for retirement now.