OneDigital Offers 401(k) Solution by Principal to Small Business Clients

OneDigital advisers will use Simply Retirement by Principal, with the goal of streamlining the process of setting up a retirement plan for businesses with fewer than 100 employees.

OneDigital and Principal Financial Group are collaborating to offer a low-cost 401(k) solution for small businesses, Simply Retirement by Principal, to OneDigital clients.

Simply Retirement is designed for new plans offered by businesses with fewer than 100 employees. First announced by Principal in 2020, the solution aims to streamline setting up and managing a retirement plan, alleviating the administration burden and risk associated with payroll integration, data collection and investment selection, according to a joint announcement Tuesday.

Clients will be able to work with OneDigital financial professionals via the Simply Retirement platform to design plans, make election decisions, sign required documents and view plan data. OneDigital is the first advisory firm Principal has collaborated with to offer Simply Retirement by Principal for small and midsize businesses, according to a spokesperson. 

“Studies show that insufficient workplace retirement options and low employee participation contribute to the lack of savings among many retiring Americans. In fact, only 42% of small businesses offer retirement benefits,” Julie Cape, executive vice president of client services, enterprise and select at OneDigital, said in a statement. “Simply Retirement by Principal will help remove complexities for small businesses and leverage the small business tax credits included in SECURE 2.0 to empower leaders to invest in their employees’ financial security.”

OneDigital and Principal’s partnership comes as more small businesses are set to offer workplace retirement plans, thanks to a combination of retirement plan incentives in the SECURE 2.0 Act of 2022 and state mandates to do so.

SECURE 2.0 offered increased tax credits to small businesses to encourage plan creation. Effective on January 1 of this year, the three-year startup tax credit increased to 100% of administrative costs, up from the previous 50%, with an annual maximum of $5,000, for employers with up to 50 employees.

“For years, Principal has valued our relationship with OneDigital to serve the employee benefits needs of small and midsize businesses,” Scott Boyd, Principal’s senior vice president for retirement and income solutions, said in a statement. “Expanding our relationship to include a 401(k) plan that leverages Simply Retirement by Principal is another example of our commitment to work with SMBs to support the growth of their businesses and the financial goals of their employees.”

Simply Retirement runs on Ubiquity Retirement + Savings’ recordkeeping platform, according to Principal’s website.

OneDigital has more than 75,000 employers offering workplace products and services, along with retirement and wealth management advice through OneDigital Investment Advisors.