Mutual fund, hidden 401(k) fee concerns driving small businesses to The Online 401(k)

Decimal, Inc., provider of The Online 401(k), planning product enhancements and sales force expansion

SAN FRANCISCO (February 10, 2004) – Small businesses, frustrated by the hidden 401(k) fees found in many retirement plans and concerned over improper management of mutual funds, are moving over to The Online 401(k), a service of Decimal, Inc., a San Francisco-based provider of full-service 401(k) plans for small businesses and single-person businesses.

The Online 401(k) (www.theonline401k.com) provides small businesses with from two to 50 employees with an easy-to-manage, low-cost, all-inclusive 401(k) solution that features plan administration (including all IRS filings), daily valuation record keeping, online plan design, 24/7 access to 401(k) accounts and a dedicated customer relationship manager.

In response to brisk customer growth, Decimal plans to ramp up in the second quarter with product enhancements and an increase in its sales force.

Small businesses concerned by hidden fees and mutual fund scandals

The recent mutual fund scandals related to improper trading and market timing have resulted in more scrutiny on fees that are charged to employees’ accounts inside their 401(k) plans. As more and more small business owners and their employees learn about the devastating effects of hidden asset-based fees, they are selecting 401(k) plan providers, like The Online 401(k) that strictly charge a flat fee.

Typical asset-based fees range from 0.25 percent to 1.5 percent of plan assets, and those fees are taken directly out of each 401(k) plan participant’s account, without any required disclosure (they do not appear as a line item expense on 401(k) statements). These hidden 401(k) fees compound greatly over time and significantly erode the 401(k) savings a participant expects at retirement.

The Online 401(k) does not charge asset-based fees or commissions, instead, it charges only a low setup fee and a monthly flat fee depending on the number of employees in the plan.

And unlike mutual fund or insurance companies, The Online 401(k) does not promote its own proprietary funds, demonstrating that Decimal acts only in the best interest of small business owners and their employees.

Decimal enhancing offerings and increasing sales force in Q2

Next quarter, Decimal will enhance its offering with the addition of a “new comparability” feature, which is extremely attractive for small business owners who want to maximize their own savings potential.

The new comparability feature of The Online 401(k) allows a small business owner to save up to $41,000 tax deferred, while still allowing the employees all the benefits of the 401(k) deferrals. (The 401(k) savings limit for employees in 2004 is $13,000).

In addition to the planned product enhancements, Decimal is responding to customer demand by expanding its sales force this year from three to nine regional sales directors, currently located in Chicago, Philadelphia and Scottsdale, Ariz. With more than 1,100 small business customers in 48 states, Decimal expects more growth this year as it continues to focus on the still untapped under-50-employee market segment.

“Nationally, more than 72 million employees of small businesses do not have a 401(k) plan,” said Chad Parks, president and CEO of Decimal. “These millions of people are risking their financial future by not taking advantage of saving for their retirement.”

Why small businesses are choosing Decimal and The Online 401(k)

“The Online 401(k) is easy to set up, and employers spend less time managing employee plans and more time focusing on their businesses,” said Parks.

More and more small businesses are choosing The Online 401(k) not only because the company doesn’t charge a “wrap fee,” but also because Decimal helps employers leverage their 401(k) plans as a recruiting and morale-boosting tool that can be immediately implemented.

Some of the small businesses using The Online 401(k) include: NEA Consulting, Pure Markets, Kellington Construction, Gaddis Kin & Herd, Family Medicine Association, ISU McNeil Insurance Agency, Wine.com and Multivision, Inc.

Participants in The Online 401(k) have access to more than 35 no-load, no-transaction-fee mutual funds from multiple fund families, including four-and five-star-rated Morningstar mutual funds. Employers and employees enjoy a wide variety of diversified fund options, covering all major asset categories as well as lifestyle funds, technology funds, and even socially responsible investment funds.

Unlike most of its larger competitors, The Online 401(k) is not limited to only a few fund families and the company does not negotiate special compensation deals with fund families. And through Decimal’s custodial relationship with Charles Schwab & Co., Inc., participants can invest in any stock, bond and mutual fund through a discount brokerage account.Small businesses between two and 50 employees interested in learning more about The Online 401(k) can request a quote at (www.theonline401k.com) and automatically receive a customized proposal via email.

Small businesses can easily establish their 401(k) plan thanks to a streamlined plan adoption process that combines web tools and live phone support. Once the 401(k) plan is setup, employees access 401(k) and investment education content, select their investments, and manage their individual 401(k) accounts – all from the convenience of their desktop over the Web.

For more information on The Online 401(k), please visit www.theonline401k.com.

E-mail us at press@theonline401k.com
or call us at 877.775.401k.