Fidelity Investments has dipped its toes into the pooled employer plan market with an offering aimed at small businesses that don't currently have a retirement plan.
The Fidelity Advantage 401(k) pooled employer plan, which launched Jan. 21, is available only to small companies with between five and 50 employees that are offering a retirement plan for the first time, said Andy Schreiner, senior vice president of defined contribution innovation at Fidelity.
The pooled plan complements Fidelity's retirement plan options for small-business owners, including SEP and SIMPLE IRAs, Mr. Schreiner said.
While the PEP is currently available only to first-time plan providers, it will evolve to include employers that already sponsor plans, Mr. Schreiner said. The PEP is currently available only through Fidelity but the firm plans to broaden its distribution network.
In addition to serving as the pooled plan provider, Fidelity will assume the role of record keeper, trustee, 3(16) plan administrator and 3(38) investment manager.
The PEP so far has received an "extremely positive initial response" with its first set of about 10 clients getting ready to join, Mr. Schreiner said. The initial adopters represent a variety of industries and are located in various regions across the country.
Each of the adopting employers will pay a one-time $500 startup fee and an annual $1,200 record-keeping fee that covers plan administration, employee communication and education, and tax filings associated with the plan. In addition, employees pay an annual $100 subscription fee and annual 0.5% investment services fee based on their account balances.
Fidelity joins at least two other record keepers that either launched a PEP or registered with the Department of Labor as a pooled plan provider. Principal Financial Group launched a pooled employer plan called EASE on Jan. 1 designed for small plan sponsors with up to $10 million in assets as well as employers looking to offer a retirement plan for their workers. Pentegra Services, meanwhile, registered as a pooled plan provider Jan. 15.
