Employee turnover increased for the nation’s small businesses due to COVID-19. A recent survey by Principal® of more than 1,000 small business owners revealed a 20% uptick over the past 12 months, reaching its highest level in years.
Recruiting and retaining employees is more important than ever. Retirement savings plans can round out a strong benefits offering and help more people make progress and potentially achieve financial security.
Small business owners saw a 20% uptick in employee turnover the past 12 months.
We offer a wide range of retirement plan solutions to meet your clients’ needs, along with outcome-oriented tools, and guidance. As a small business grows or their needs change, they can transition from one solution to another without changing providers.
These four options deliver flexibility and scalability to your small business clients. Here’s how they break down.
Simply Retirement by Principal® —100% online from plan design and purchase to onboarding and administration.
Less time. You can create, customize, and send proposals to clients online so you save time on paperwork. Or you can walk them through the steps to do it online themselves. Either way, you can set up a 401(k) plan for a small business without investing a lot of time and resources.
Extra support. Once it’s set up, clients receive help with tasks such as compliance testing and reporting.
Expand your business. This streamlined solution allows you to connect with more small business clients and build relationships you may not have had before.
Guidance from you. Many small business owners don’t feel comfortable navigating retirement plans on their own. That’s where your expertise still comes in—to handle questions, give guidance, and help them get started.
Simple pricing. A retirement plan for less than $6 a day1. Low, flat-fee recordkeeping pricing that doesn’t change as your client’s plan assets change. It’s a predictable cost that can help with budgeting. Visit SimplyRetirement.com for pricing details.2
Tax credit. There are SECURE Act tax credits up to $5,000 per year, which can help offset expenses of the plan for the first three years.
State requirements. This product may help small businesses meet any state mandates to offer a retirement solution to their employees.
1. Based on $175/month plan sponsor recordkeeping fee only (after $500 one-time setup fee), when plan sponsor elects to have $6 per participant recordkeeping fee and any applicable financial professional compensation deducted from participant accounts. If working with a TPA, the plan sponsor recordkeeping fee is $135/month, which assumes the TPA will provide select administrative services and bill their fees separately.
2. Fees paid by the business owner are billed quarterly. Fees paid by participants are deducted monthly from participant accounts. Participant fees are charged if the individual balance is greater than $100 on the fee assessment date and regardless of whether the participant is active or inactive. Custodial and investment fees are charged against participating employees’ accounts (those vary by investment and range from 0.03% - 0.94%, as of July 31, 2021). Financial professional compensation and TPA fees are also additional and may be billed to the business owner or deducted from participant accounts.
Principal® EASE (PDF) —A new option for employers who want to join a Pooled Employer Plan (PEP).
New solution. Since this was just launched January 1, 2021, it gives you a new option to talk about with employers and associations.
Your guidance is needed. You’ll help explain the PEP approach and guide employers through streamlined plan decisions and flexible options available to them.
PEPs are trending. More than one-third of defined contribution plan sponsors (38%), both large and small, reported they may look to join a PEP or multiple employer plan (MEP) in the next two years.1
1. Escalent. Cogent Syndicated. Retirement Planscape® Survey, May 2020.
Increased efficiencies. The SECURE Act allows unrelated employers to participate in a single, pooled, employer plan (PEP). By combining efforts in this group 401(k) arrangement, they outsource administrative tasks and free up valuable time to focus on their business.
Added expertise. Clients rely on experienced financial professionals to service the plan and manage the investment lineup.
Reduced risk. Your clients shift risk to designated fiduciaries along with related tasks. As the Pooled Plan Provider (PPP) and 3(16) Plan Fiduciary, Principal® has a professional, experienced fiduciary committee provide governance oversight for the PEP’s plan administration.
Principal® Flex (PDF) and Principal® Flex-Open (PDF) —Investment flexibility and simplified fee structure.
Saves time. Two streamlined packages help you easily arrive at ballpark baseline cost, with fewer inputs. You can quickly evaluate plans with a transparent cost structure.
Flexible compensation. There’s flexibility in advisor compensation arrangements: fee-based or flat commission-based scales.
Investment options. Working with you, they choose to use either a Principal sub-advised investment option lineup (Principal® Flex), or an open architecture investment approach (Principal®—Open). It’s based on zero revenue sharing investment options, but other share classes and rate levels are available.
Custom features. They can offer participant services and additional customizable plan features typically enjoyed by larger organizations.
Choices offered. How they collect and pay the administrative costs of the plan is flexible.
Added services. Clients can easily add a compatible investment fiduciary service.
Choose a streamlined approach with a Third Party Administrator (TPA) (PDF) or without a TPA (PDF).
Get started
We make it easy for you to get information, resources, and support to help your clients. Here are questions and suggested responses to start and guide your conversation with employers.
Contact your local Principal® representative or support team: Call