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401(k)bps

Dialing in to the Web for employee retirement plans

With the talent war besieging companies of all sizes, good help is scarce-and employees have grown accustomed to the good life. Once upon a time, a 401(k) retirement program was a tantalizing plum on a company's list of benefits; these days it's a must-have.

Now, thanks to a number of companies taking 401(k)s to the Web, entrepreneurs can afford plans that previously would have demanded high fees and additional staff. The key is automation, says Bill Carey, executive vice president of Covington, Kentucky-based Fidelity Institutional Retirement Services Co., which runs Fidelitye401k.com. Because the process-from enrollment and selection of investment options to administration-is handled online, fewer resources are needed to run it. Carey estimates the cost of an e401(k) at roughly half that of a traditional plan. Also, Fidelityarticipants can choose from up to 25 funds-more than in traditional plans.

Having more funds to choose from could spell confusion for employees, but proponents of e401(k)s say the Web vastly improves the education process. Rather than wading through thick tomes of information, participants use Web-based tools to set up investments, says Carey. From there, it's just a matter of a little human resources administration.

At Emplanet.com, an e401(k) provider based in Westborough, Massachusetts, business owners can fashion plans for their companies in 15 minutes online, says senior vice president of business development Gary Gould.

But, inasmuch as automation offers cost savings and simplification, the human element is still crucial, says Gould. Emplanet offers plan sponsors live help via phone during business hours as well as a 24-hour automated phone line and online help.

As another alternative, entrepreneurs can outsource 401(k) headaches to Walnut Creek, California's ez401k.com, which handles online plan administration and investments with customized consulting on the side.

"We act as the clients' 401(k) HR division," says owner Robert Steinhorn. Each plan is custom-made-a necessity, he adds, because complexity is the nature of the 401(k) beast. "Running 401(k) plans and the operations behind them makes the election fiasco in Florida look like child's play."

E-tirement plans

FidelityE401k:
Setup fee: $750; annual fee per plan: $1,750; annual fee per employee: $20
Limited call center support
Online tools; record-keeping; compliance support

Emplanet:
Fees vary
Fully automated operations
Scalability for growth companies

ez401k:
Setup fee: $401; annual fee per plan: $1,600; annual fee per employee: $36
Offers consulting services
Handles all IRS or Department of Labor audits


C.J. Prince is a New York City writer who specializes in business topics and the executive editor of Chief Executive magazine.

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This article was originally published in the February 2001 print edition of Entrepreneur with the headline: 401(k)bps.

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