The Online 401(k) has launched a payroll-deduction IRA designed specifically for small businesses with 100 or fewer employees.
Starter(k) is a retirement savings options that doesn’t have the same constraints as a 401(k) and is a good option for small business owners who need a simplified option to help their employees save for retirement, said Chad Parks, founder and CEO of The Online 401(k).
“Starter(k) is also an ideal solution for businesses who may be subject to legislative mandates, as states such as California consider requiring employers to implement auto-retirement savings through employee paycheck deductions,” he said.
The plan is inexpensive, costing employers $25 a month versus a 401(k), which can cost several thousand dollars per year. Participating employees pay $4 a month.
The investment lineup is not overwhelming. It features 10 target date model portfolios made up of exchange traded funds for a fee of only 0.25 percent—inclusive of investment expenses (ETFS), fiduciary advice and trading costs. The portfolios are selected and monitored by Fiduciary Plan Review, a third-party investment expert.
Participants’ savings are automated and once they pick their investments, they don’t have to make any other decisions.
Since it is an IRA and not a 401(k) plan it isn’t subject to ERISA, which saves employers money.
The Online 401(k) is a Web-based provider of affordable, no-hidden fee retirement plans for small businesses.