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Small Business 401(k)s Meet the Internet
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By Stephan Roche

Here’s a question on nearly every worker’s mind: “How can I retire when I want and still maintain my current lifestyle?" It’s a terrific question, and one that is particularly pertinent for small businesses and their employees

Today, too many small businesses don’t offer a 401(k) plan because simple-to-use, cost-effective plans are unavailable. New on-demand, internet-based technology is quickly making this a problem of the past.

Small businesses in the United States employ more than 40 million Americans. These workers have an enormous impact on our economy. Yet, providers of retirement plans have consistently ignored this market because of the high cost of serving them. In fact, providers of 401(k)s, the most powerful and preferred retirement solution, have sold just 270,000 plans into a market with 11.6 million businesses.

Small businesses appreciate the importance of offering a 401(k) program to their employees. They want it. Most business owners want to help provide a secure financial future for their employees. They also understand a good 401(k) is a powerful competitive advantage in recruiting and retaining employees. Of course, the owner can build their own personal retirement nest egg by taking advantage of tax-deferred 401(k) savings.

The problems for small business are that most 401K offerings available to them are not cost-effective and are far too complex to administer. Small business owners wear multiple hats and simply do not have sufficient time to devote to buying a complicated financial product.

Get ready, though, for a new era has already begun. Though not widely recognized, it is now possible to leverage on-demand technology to dramatically simplify the set-up and administration process of 401(k) plans. As a side benefit, these new technologies also strip away many of the unnecessary expenses of traditional 401(k) plans.

By enabling small business to easily self-serve and manage a 401(k) program, small businesses finally gain access to powerful retirement savings products that large businesses enjoy.

Just a decade ago, the retail brokerage market faced a similar plight in efforts to serve small investors. High costs and overly complex products tended to exclude them from the market. Internet-based trading was introduced. It dramatically lowered the costs and provided entry for first-time and small investors.

A variety of companies leveled the playing field for small investors with low-cost, simple and accessible investing services. With no account fees or minimums and low investing commissions, the small investor gained access to previously unavailable investing opportunities.

Similarly, the new on-demand, internet-based 401(k) plans offer the small business owner major advantages:

Low Cost: Major cost reductions come from eliminating many of the traditional players involved in selling and managing a 401(k) plan.

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Stephan C. Roache is the Vice President of Sales and Marketing For ShareBuilder.
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