Outsource Your 401(k) Plans

Whether you are managing your human resources in-house or outsourcing it piecemeal, you might consider getting help managing 401(k) employee retirement benefits because it can be especially tricky for small businesses.

At one time it was hard to find third-party providers who would

service very small companies (fewer than 25 employees). Until recently, there were only high-cost plans that charged high maintenance fees, which made it burdensome for employers and less attractive for employees wanting to save as much of their hard-earned money as possible.

But that's starting to change as more vendors, old and new, offer Web-based plans for small companies that are trying to administer these themselves. Sharebuilder is one such offering. The company, which has provided online services to individual investors since 1999, recently expanded into the small business market by providing an online 401(k) program. The company is targeting firms with fewer than 100 employees, says Stephan Roche, vice president and general manager of Sharebuilder's small business group. "Eighty-five percent of small businesses today have no 401(k)," he says. "These small businesses are just as underserved as small investors are."

Online plans are administered entirely over the Web and telephone. If you're interested in an online 401(k) plan, it's important to remember that you'll get less personal advice and hand-holding than with a plan purchased through more traditional means. One of the reasons these plans cost less is because there is no in-person service.

If you shop for an online 401(k) plan, make sure to investigate the following:

• The setup fee and ongoing fee structure
• Whether and how much employee education is provided
• The kind of investments available to choose from
• The management fees charged within each fund and for the overall management of portfolios
• How quickly the plan managers respond to e-mail requests
• Whether there is an extra charge for telephone support

The following is a list of sites that offer online 401(k) plans:

• The Online 401(k)
• 401(k) Easy Online
• Fidelity's Online 401(k) Services for Growing Companies
• Impact401(k)
• ExpertPlan
• EZ401(k).com