Empowering Small Business 401(k) Plan Solutions

The Colorado-based company announced this week that it plans to launch a new digital solution to make it easier for small employers to plan for workplace retirement.

The new end-to-end 401(k) product, launching in mid-2024, will provide advisors and third-party administrators (TPAs) with a simplified way to set up retirement plans. The new program, called Ready Select, is designed for small start-ups with assets of up to $1 million.

According to the announcement, the new app will help reduce implementation time, as well as the financial and administrative costs of sponsoring a 401(k) plan, so that “advisors can help business owners spend less time managing their workplace benefits.” The The system also includes comprehensive investment advisory services provided through a third-party ERISA fiduciary.

After working with an advisor or TPA to generate on-demand proposals and complete plan setup, small business owners and employees can access digital solutions and the financial wellness and education programs offered by Empower.

The company explains that over the past few years, complexity and administrative burden have created barriers for small employers and startups to develop workplace retirement plans. Additionally, management teams are often busy growing the business, so taking on the additional work of providing retirement benefits can be daunting.

Citing data from the Small Business Administration, Empower noted that there are an estimated 33.2 million small businesses in the United States, with approximately 62 million people working for these employers. These employers represent many private sector workers who are not currently covered by workplace retirement plans.

“It’s time to close the access gap and we’re aggressively addressing it,” said Edmund F. Murphy III, President and CEO of Empower. “We have the technology, expertise and support of our consultants and TPA partners to Solve this problem for the millions of Americans who need a retirement plan.”

Murphy also praised the public-private partnership inherent in the national workplace savings system, which has played a key role in helping to close the savings gap.

As NAPA Net readers know, Congress passed the SECURE Act in 2019 and the SECURE 2.0 Act in late 2022, making retirement plans more accessible to more workers. To that end, Empower noted that retirement plan coverage for the lowest-income households increased by 25% between 2019 and 2022, more than double the growth rate for any other income group during that period, including after the SECURE Act. Years.

“Advisors and TPAs ​​using Ready Select will be able to help small employers provide the most cost-effective retirement plan options that best meet the needs of their employees,” added Joseph Smolen, executive vice president of core markets at Empower. “These partners know how to help. Empower, Empower stands ready to help them bring their expertise to new programs.”

Empower currently manages approximately $1.5 trillion in assets for more than 18.5 million investors through retirement planning, advice, wealth management and investments.