JPMorgan Unveils 401(k) Plan for Small Retirement Plans

October 19, 2020

JPMorgan has launched a 401(k) service aimed at small business owners, according to news reports.

The firm’s Everyday 401(k) lets companies set up a plan “quickly and easily” and for as little as $75 a month, FA-IQ sister publication Ignites writes, citing a Thursday announcement from JPMorgan.

The new plan’s investment options include JPMorgan’s Smart Retirement Target Date Funds and R6 institutional shares of other JPMorgan Asset Management products, a spokesperson tells Ignites.

 SS&C will provide recordkeeping services. The service provider already supports 10 million plan participants within its Retirement Solutions business, JPMorgan executives tell Ignites. Mesirow Financial serves as an independent fiduciary for the plans and monitors the investment menu. All sponsors that sign up for the service use the same investment options, a JP Morgan spokesperson tells Ignites.

“All of these elements allow us to pass on meaningful cost savings to the small business owners and their employees,” he tells Ignites in an email. The spokesperson declined to say how JPMorgan is sharing the revenue with the other plan service providers. 

JPMorgan sold its recordkeeping unit, which focused on the large-plan market, to Great-West Financial in 2014. That business is now part of Empower Financial.

JPMorgan may add funds from third-party managers to the current investment menu “if the product expands to other distribution channels,” Ignites reports.

The company’s decision to roll out the new plan likely stems from the large number of banking relationships the firm already has with small businesses, Chris Brown, principal and founder of Sway Research, tells the publication.

With its nearly 4,900 branches, as JPMorgan’s website says, they have “a warm lead into tens of thousands of small businesses around the country,” Brown says.

JPMorgan’s move follows Bank of America’s announced plans to build out its retirement and workplace benefits sales team. BofA executives in February said the effort would target corporate bank clients in promoting retirement plan services.

JPMorgan says that its research found that more than a third of small business owners have plans to roll out a 401(k) plan next year.

However, the publication notes that roughly 60,000 businesses with fewer than five locations have shuttered between March and August, according to a Bloomberg analysis of data. And a July survey by the U.S. Chamber of Commerce cited in the Bloomberg article found that around 58% of small business owners are concerned about having to close for good, Ignites writes.

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By Alex Padalka
  • To read the Ignites article cited in this story, click here if you have a paid subscription.