Equitable launches new turnkey 401(k) program for small businesses

Small businesses understand the need to offer 401(k) plans to help recruit and retain employees in a tight labor market, and pending SECURE Act 2.0 legislation would give further incentives. However, the administrative burden can be daunting when companies also are dealing with high inflation, supply chain snags and other challenges.

Equitable, a leading financial services organization, recently launched Retirement Gateway for Small Business, which aims to simplify onboarding and administration for small businesses, including those with startup plans and ones with account values up to $500,000.

“We anticipate the enhanced tax credits for small businesses establishing retirement plans included in the SECURE Act 2.0 proposal will help grow the micro-401(k) market over time,” says Keith Namiot, COO of group retirement for Equitable. “We have aligned our new program with where the market is expected to grow, and we are excited to help plan sponsors and advisors overcome the administrative barriers associated with setting up 401(k) plans, a hurdle that has historically deterred many small businesses from offering them.”

Retirement Gateway addresses proposed provisions of SECURE 2.0, such as the automatic enrollment requirement for new plans created by businesses with 10 or more employees. The growth of state-mandated retirement plans also is driving the demand for this type of program. The program offers packages of services, some of which are made available through partnerships with unaffiliated third-party providers, to help ease demands on plan administrators and improve participant outcomes. They include:

• 3(16) administrative fiduciary: Relieves the fiduciary burdens of running a 401(k) for plan administrators.
• 3(38) investment fiduciary: Provides professional assistance with investment management tasks.
• Automatic enrollment: Reduces the amount of time employees spend on the enrollment process, which can lead to greater participation and increased savings rates.
• Stadion-managed accounts as the qualified default investment alternative: Reduces the complexity of selecting investments by automatically investing participants in a personalized portfolio.
• 360 payroll integration: Reduces the amount of time and effort spent managing census and payroll files.

Related: The Safe Harbor 401(k): Designed to reduce the administrative hassle for small businesses

“Small-business owners are focused on operating their organizations,” says Jay Zickerman, head of product innovation and implementation for Equitable’s group retirement business “That’s why it’s important to take the guesswork out of choosing the right retirement plan design that can help them achieve the best participant outcomes. Predefined packages help advisors reduce the administrative burden and time spent selecting a plan, point their clients to the right amount of fiduciary coverage based on their specific needs and streamline the overall onboarding process.”

Another goal of the program is to help cut the time spent on getting plans up and running by quickly connecting advisors to a third-party administrator, who can assist with plan design, implementation and ongoing administration.