February 27, 2024

Bucks Blog: Vanguard Aims at Small Companies With Low-Cost 401(k)s

Vanguard says it will begin offering low-cost 401(k) packages for smaller companies later this year.

Vanguard says the packages will target plans with assets of less than $20 million and will include record keeping, participant education and call-center support. The offerings will emphasize low-cost index funds, including the Vanguard Target Retirement Funds. The plans will be administered by Ascensus, a retirement-plan servicer.

The move is likely to be welcomed by smaller companies, where employees often face difficulty getting good, low-cost retirement plan options.

The move by Vanguard may be partly defensive because demand for lower-cost options based on index and exchange-traded funds has been growing and more companies are entering the market.

Earlier this year, Charles Schwab announced it would begin marketing a 401(k) package that included only index funds, which would be in place for 2012. And next year, Schwab also plans to offer 401(k) plans comprising only exchanged-traded funds.

Schwab’s move follows offerings from players like ING Direct’s ShareBuilder 401K, which was an early adopter of plans offering index funds and E.T.F.’s.

Article source: http://feeds.nytimes.com/click.phdo?i=1f47e6622bb51374c57379e0b2ce6544

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