TPAs: Win Back Lost 401(k) Business With Some 401k Enginuity

LOS ANGELES 401(k) Pro, Inc., and Union Bank of California (UBOC), N.A., have developed a web-based 401(k) plan administration service based upon 401(k) Pro's desktop product, which The Wall Street Journal said, "...allows small businesses to manage 401(k) plans as easily as a consumer navigates family finances with programs such as Quicken" (12/27/99).

The new web-based system allows plan providers to setup and manage low-cost, option-rich 401(k) plans from any location connected to the Internet. Like its forerunner product, it is particularly geared toward serving small businesses of one to 100 employees.

Pentec Systems, Inc., an affiliate of 401(k) Pro, is making this web-based 401(k) technology available to third party administrators and plan providers as well as to companies interested in hosting the application for TPAs and plan providers under an Application Service Provider (ASP) model. For more information, go to http://www.tpa-401k.com or call (800) 660-0050.

"Our online service will not only retain the affordability and flexibility of our desktop product but also add the conveniences of online access to plan administration information and provide expanded plan sponsor and participant functionality." Donna Ross, senior vice president and manager of UBOC 401(k) administration stated in a September 2001 joint UBOC / 401(k) Pro press release.

For TPAs, 401k Enginuity means the ability to offer affordable, option-rich 401(k) plans within a highly automated, completely online system that keeps back-office expenses to a minimum yet displays a high level of service to plan sponsors and participants.

The system makes an extremely competitive 401(k) product, particularly within the small and mid-sized 401(k) markets: a 15-person plan wholesales to the TPA for $100 to $250 a year; suggested retail pricing on this 15-person plan would be $995 a year (actual pricing is completely the TPA's to set). Similarly-sized web-based plans are selling for over $2,000 a year from providers such as Fidelity Investments and Principal Financial Group. These bundled plans impose additional fees for loans, distributions, and compliance testing, and limit investment options to packaged, proprietary funds. In comparison, 401k Enginuity is customizable to accommodate an unlimited number of mutual fund investments offered by an unlimited number of mutual fund groups---all selected by the TPA.

Using 401k Enginuity, a TPA can offer clients a heightened standard of service yet significantly reduce back office labor requirements. Back office labor savings result from numerous technological advantages: (1) the system is highly automated and extremely easy to use, (2) the system is completely online and can be seamlessly updated as needed, (3) plan sponsors upload contribution data directly into their plan-specific section of the system, expediting processing, and (4) plan participants serve themselves to most areas of plan participation; they can update investment designations, allocation rates, personal account information and more at any time within a password-protected, secure Internet environment.

A TPA can further reduce demands on its back-office personnel by activating any of various levels of self-service administration for plan sponsors, and it can set the level on a client-by-client basis. Potential self-service features for plan sponsors include printing statements, completing year-end tax forms, running compliance tests, reviewing/approving loan and distribution requests, and altering the plan's investment offerings.

401k Enginuity is fully scaleable both in terms of the number of 401(k) plans and number of participants per plan that it can handle. A TPA can efficiently and profitably service 401(k) plans with only one or two participants as well as plans with hundreds, even thousands, within a single system. Each plan run via the system is individually customized to the preferences of the TPA as well as its plan sponsor client.

401k Enginuity can be purchased outright, or leased on an annual basis, or licensed to be run by proxy for the plan provider under the provider's chosen brand name. In response to the current trend toward the Application Service Provider (ASP) model for technology outsourcing, Pentec also offers licenses to companies entering the rapidly expanding sector of plan administration "hosting" for small and mid-sized plan providers.

For more information, please go to http://www.tpa-401k.com or call 1-800-660-0050.