Small businesses aren’t known for offering rich retirement plans; workers in firms with fewer than 100 employees are much less likely to have a retirement plan available to them than workers in large firms, according to the Small Business Administration. The financial services industry is making inroads to service small business retirement needs, however, most recently with the Merrill Edge Small Business 401(k) through Bank of America. This retirement solution offers small business owners, who generally have 401(k) plan assets under $250,000, a simplified, easy-to-manage retirement plan with lower costs than many traditional 401(k) plans, enabling small businesses to provide an important benefit to their employees.
“We know how important small businesses are to our nation’s economy and how dedicated their owners are to their employees,” says Robb Hilson, Bank of America Small Business executive. “Offering a simplified 401(k) plan, designed to address the needs of small business owners and their employees, is yet another way we are showing our commitment to supporting small businesses.”
According to a recent Government Accountability Office report, only 14% of small business employers (those with up to 100 employees) offer a retirement plan to employees. Based on interviews with small employers, the report cited plan complexity, administrative burdens and carrying out fiduciary responsibilities as among the key barriers to sponsoring retirement plans. And according to SBA, almost 72% of workers in small companies have no retirement plan available through the company; an additional 9% have a company-sponsored plan available but do not participate. One of the primary reasons why smaller firms may not offer retirement plans to their workers is the cost of setting up and running a retirement plan, which the solution addresses.
The Merrill Edge Small Business 401(k) is self-serviced and managed completely online, giving small business owners secure access when and where it is convenient for them. Additional features and benefits include affordability, access to 401(k) specialists to help with online plan setup, web-based 401(k) recordkeeping administration services tailored for small businesses provided by Plan Administrators, Inc, transparent fees to help quickly assess the right plan for their business and control the bottom line and a streamlined investment menu selected by Morningstar Associates, LLC, who assumes investment fiduciary responsibility and simplifies the fund selection process for clients, while helping take the guesswork out of fund selection for employees.
A number of government programs have sought to simplify retirement plans in order to encourage more small businesses to sponsor them. These efforts have met with limited success and come with a cost, but this type of tailored plan could be an answer for business owners who want to help employees with their futures, but don’t have the funds large employers have.
