The Online 401(k) Announces Plan Sponsor’s Bill of Rights

Retirement Plan manager continues its crusade against “industry malpractices”

SAN FRANCISCO (March 6, 2007) – The Online 401(k), (www.theonline401k.com) the leading provider of full-service Web-based 401(k) plans for small and singleperson businesses, today announced that as part of its formal, public crusade to combat the excessive, opaque fee structure found in most 401(k) retirement plan offerings, it has created a 401(k) Plan Sponsor’s Bill of Rights.

Chad Parks, founder and CEO of The Online 401(k), says, “The average plan sponsor is left to twist in the wind without direction on how to structure a plan to make it cost-effective for both the sponsors and participants. This Bill of Rights aims to highlight what sponsors ought to expect from their retirement plan providers.”

Plan Sponsor’s Bill of Rights:

Article I: The right to fair disclosure of fees

A plan sponsor is owed, up front, a straightforward explanation of all the fees and expenses that the plan will incur for both the plan and its participants. Simply put, many 401(k) providers charge asset-based fees (fees based on the amount of money in the plan vs. a flat fee). As a 401(k) balance grows, so do your fees, so you never know how much you are paying. These fees don’t show up in statements, and 401(k) providers don’t have to disclose them, so you would never know about these changes. The ideal plan should have a flat fee for service, so that you always know what your true expenses are.

Article II: The right to choose to match

What many plan sponsors do not know is that they do not have to provide any matching contributions for employees. Many 401(k) providers force a business owner to match funds for employees even though it is not a requirement to have one in place. These providers do this in order to increase the amount of assets in a plan.

Article III. The right to a full complement of investment choices with plain English fee information for each.

Many 401(k) providers may seem like a bargain at first. When you take a look under the hood, you’ll find that they get you with investments “loaded” with sneaky ways to suck money away from the participants (which usually include plan sponsors!).

These providers either force you to choose from a limited selection of investments from one company (i.e. their own proprietary product) or they have investments that charge fees for putting money in and taking it out. Worse yet, 401(k) providers may profit from the investments that are offered and therefore their suggested choices may be in place to benefit themselves moreso than a plan sponsor or participants.

Article IV. The right to a hassle free, no-fee setup process.

Some 401(k) providers make setting up a 401(k) seem intimidating and confusing. It doesn’t have to be. Setting up a 401(k) and managing it should be a simple process – it shouldn’t take more than an hour to set up your plan, and no more than thirty minutes a month to run it.

In addition, you should not have any additional surprise charges during the setup. Too often, 401(k) providers take advantage of the setup process to levy extra, hidden fees that were not discussed before signing the contract.

Article V. The right to no minimum balances

Setting up a 401(k) plan for the first time can be hard enough. Plan sponsors should not have to contend with minimum balance requirements that are designed to make the plan more profitable for those providers that garner an asset-based management fee. For sponsors and participants alike, getting started in the retirement plan game is a big first step. There should be no reason to discourage that, particularly with minimum balance requirements.

About The Online 401(k)

Small businesses interested in learning more about The Online 401(k) can request a quote at www.theonline401k.com and automatically receive a customized proposal via e-mail. Small businesses can easily establish their 401(k) plan, thanks to a streamlined plan adoption process. The Online 401(k) offers a wide variety of investments to choose from on multiple platforms. Once the 401(k) plan is set up, employees can access 401(k) and investment education, select their investments and manage their individual 401(k) accounts – all from the convenience of their desktop.

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