Fidelity Unveils Small-Business Retirement Plans for RIAs

Fidelity Investments has announced a new Small Business Retirement Plan program for clients of registered investment advisers (RIAs).

Fidelity said the program includes:

  • A Third-Party Administrator (TPA) Referral Network—RIAs that custody assets with Fidelity Institutional Wealth Services can access a network of TPAs also on the Fidelity platform. The TPA and RIA work together to close the sale of the retirement savings plan, and then convert and implement the plan. TPA services include an open-architecture approach, extensive fund family options via the Fidelity network, plan design, and full 401(k) recordkeeping services.
  • Self-Employed 401(k)—Well-suited for owner-only businesses in which the owner wishes to make the largest possible contribution to the plan.
  • SEP IRA—A plan that may be more suitable for individuals who have variable incomes and want to make larger but flexible contributions.
  • SIMPLE IRA—Available to businesses with up to 100 employees, this plan is funded by both employee and employer contributions.

Vanguard Reports Uptick in Target-Date Funds

A new Vanguard study reports a significant increase in the use of target-date funds in retirement plans.

In 2009, 75% of defined contribution plans at Vanguard offered a target-date fund, up from 13% in 2004, and 42% of the participants in those plans invested in the funds. Of those 42% participants, Vanguard estimates that half chose the funds voluntarily rather than being placed in them as a default investment.  

Of all plans at Vanguard that have designated a qualified default investment alternative (QDIA ), 80% had chosen target-date funds as the default. In addition, 21% of Vanguard plans have adopted automatic enrollment—quadruple the number since the end of 2005—and nine in 10 plans with automatic enrollment are using target-date funds as their designated default fund. 

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The report, “Target-Date Fund Adoption in 2009,” analyzed 3.2 million participants holding 3.4 million accounts in 2,200 defined contribution plans administered by Vanguard. 

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