Participants' assets will be spread across a menu of non-proprietary index tracking exchange-traded funds, known for their low cost to investors. ETF adoption has surged with retail investors of late, outpacing growth in long-term mutual funds.

But few 401(k) investors have access to the low-cost funds. On Betterment's 401(k) platform, it is all they will have access to.

Stein is convinced ETFs are necessary to compress participant costs in the defined contribution market, which he says is inherently opaque.

"The 401(k) market isn't known for pricing transparency," said Stein. "ETFs are cheaper and more efficient for retirement savers."

He wants sponsors and retirement savers in workplace plans to realize those savings. Sponsors with at least $1 million in assets won't be charged any upfront fees. All in, participants will pay as much as 60 basis points in fees, and as little as 10 basis points, depending on the size of the plan.

The latest edition of the 401(k) Averages Book, published February 2015, shows participants in small plans with less than $2.5 million in assets pay an average of 144 basis points.

A 2014 report by Deloitte Consulting and the Investment Company Institute, a trade group that represents the mutual fund industry, found participants in plans with up to $10 million in assets paid an average of 127 basis points, or 1.27 percent of assets in accounts.

Plans with up to $100 million assets averaged 82 basis points in fees, while plans with up to $500 million averaged 57 basis points, and plans over $500 million averaged 37 basis points in participant fees, according to Deloitte and ICI.

Stein said Betterment has had an eye toward the defined contribution market since its founding five years ago.

But the company's experience last year implementing a retirement plan for its workforce, said to be around 90 employees, convinced him it was time to craft a robo option for the 401(k) market.

"The process was so broken," he explained. "It shouldn't have taken us five months to implement a plan, and we really struggled with the expense of it all. It was a really frustrating process for us."

On top of leveraging cheaper indexed investments, Betterment will compete as a full-stack service provider—it will be a plan's record keeper, custodian of its assets, and fiduciary advisor to sponsors and participants.

That centralization of services is as big of a factor in driving participant costs down as are the lower expense ratios on the indexed funds it offers.

Stein says such a turnkey solution hasn't been offered since the Employee Retirement Income Security Act paved the way for the country's transition to defined contributions plans.

He also says Betterment is the only company among the generation of robo advisors that has invested in record keeping capabilities.

"We're completely unique relative to the incumbent service providers and other robo firms, which are not full service providers," he said. "We built the company that way from the beginning. It was a major upfront investment, but now we're afforded more opportunities because of it."

Betterment recently raised $60 million more in venture capital, increasing its total funding to over $100 million.

The advice component of the platform will set the technology apart from the existing RIA model, predicts Stein, who said he appreciates what RIAs have done. But in Stein's vision for the 401(k) market, RIAs have worn out their welcome along with the rest of providers to plans.

"Our platform offers holistic advice specifically to participants' needs. Very rarely are participants getting direct advice under the existing RIA model. They may provide a good selection of funds, but they don't tell you which ones to pick," reasoned Stein.

Betterment of course will, pairing participants' investment horizon and risk tolerance to specific savings goal, and periodically rebalancing portfolios based on algorithms written by the firm's own developers and financial analyst pool.

"The advice we give and how we communicate is a really strong part of what we do," said Stein.

He thinks of it as a managed account without the fee. "We're counterintuitive. We give advice to participants but at a cost less than unadvised plans."

He is a strong proponent of the Department of Labor's proposed fiduciary rule, and thinks the DOL will be even more supportive of Betterment's new platform for 401(k) participants than it has for retail investors.

"With what they are trying to do with the fiduciary proposal—it is almost as if the DOL is inviting us to launch this product," said Stein, who clarified that Betterment did not literally receive such an invitation from the Department.

Full rollout of the platform will begin in the first quarter of 2016. At least one client has already signed up.

Stein expects small and midsized businesses will be the first adopters, but stresses the platform is designed for "every company."

"We'll be accessible to anyone. Larger plans will have the most to save," explained Stein.

He said participants in plans with more than $1 billion in assets can expect to pay 10 basis points in fees.

At that rate, it will be harder for large sponsors to ignore Betterment's option, said Stein.