Why a 401(k) Syndicate is the Best Option for a Chamber of Commerce

When it comes to the 401(k) retirement benefit, it’s important to make it easy-to-use and flexible. In fact that is why technology can do so much in the ways of simplifying and improving how saving for the future is viewed and implemented. When you combine the use of technology with organizations, such as a chamber of commerce (chamber), you’ll find a very powerful and unique relationship.

In an effort to build out a network and expand a retirement offering like the 401(k) plan, you could simply leverage an already established network found within a chamber. This is easier said than done, but the reciprocal benefit found from a chamber aligned with what 401GO offers, referred to as a 401(k) Syndicate, opens up a completely new and exciting opportunity.

To give a little history, the traditional offering for a retirement benefit plan with a large group of employers, such as those members within a chamber is to create or sponsor a multiple employer plan or MEP. However, I have to say that the MEP is simply the wrong fit for this type of organization.

For a number of reasons an MEP doesn’t work for a chamber. Here are the top three:

  1. An MEP puts the fiduciary responsibility onto the chamber. In other words, the chamber must be the sponsoring organization, which means they will hold a trustee role and be required to oversee the MEP’s operations and service providers.
    • There are options coming down the pipeline that would allow other organizations to take much of this from the chamber, but it comes at a cost.
  2. The cost of an MEP should always be understood before starting down that path. It’s expensive to get off the ground, and requires many service providers, which then adds even more to that number down the line. Not to mention, once this is started a chamber is hooked into it. It’s not easy to just walk away once you get going (like a boulder barreling down a mountain, it won’t stop until it’s made an impact).
    • Consider the time expense and if the chamber would have to hire someone to keep up and maintain that MEP.
  3. A chamber’s model doesn’t make sense with an MEP. They are a resource for their members, and would instead want to provide an offering or benefit instead of being the sponsoring organization. It also blurs the line with some of their members in the financial services. While some organizations are more aptly suited, such as an association or even a PEO, an MEP might make more sense.
    • If the MEP is costing the chamber money it can quickly become the focus and distract from the resources and education for which they are wanting to provide.

As states ramp up Secure Choice retirement plan alternatives, it would be timely to look at how a chamber can be a player in providing an option to their members. Additionally, there are many opportunities that come up with the SECURE Act with regard to costs and grouping retirement benefits (you can find more information about this here). Moreover, a group 401(k) plan gives flexibility to the chamber in terms of providing a resource to their members, instead of sponsoring something that puts them in a bit of a pickle with those members that are trying to provide similar or the same services. That is why the 401(k) Syndicate meets and matches most of the criteria previously mentioned.

A 401(k) Syndicate:

  1. A 401(k) group offering in which the chamber has no fiduciary obligation or responsibilities.
  2. This runs outside the chamber in a way that does not disrupt the resources they are trying to provide their members. Instead it is something more easily referenced for those members in which overlap in the industry (benefit and investment advisors more specifically).
  3. Each employer is setting up their own 401(k) plan within an automated railway. The plan design options are ideal and easily adopted through the 401GO platform. (A 15-minute setup should certainly save on the time expense.)
  4. The chamber can co-brand to allow for their members to look to the 401(k) Syndicate as a cohesive retirement benefit. They would continue to rely on the chamber for those services without the contradictory pushiness of an MEP that has the underlining pressure of joining instead of being optional.
    • Think of the co-branding as having the chamber logo for all those businesses when they login, on both the employer and employee level.
  5. As mentioned numerous times in this article, one of the best things about a 401(k) Syndicate is the flexibility. If there is a business member in the chamber that works with a financial advisor that they would like to link up for their 401(k) plan, they don’t have to give that up. A 401(k) Syndicate can accommodate many financial advisors within it.
  6. Cost may be last on this list, but certainly not unimportant. A chamber can offer a 401(k) Syndicate to businesses with under 50 employees for $9 per participating employee a month (no setup, document, filing, administrative fees, etc.).
    • A chamber can also arrange an even more reduced cost to the $9 per participant per month or receive a referral credit.*

Keep in mind, there are a lot of options out there, but when it comes to the benefit in the retirement space for 401(k) plans, automation is king. Not only does it open options such as the 401(k) Syndicate, but it also creates efficiencies that only improve features and reduce cost.

At 401GO we think a partnership with a chamber is the ideal combination to leverage the network of members and power of automation. For more information on partnering with 401GO, please visit our partner site here or schedule a meeting here.

Additional resource pertaining to this article:
https://www.cnbc.com/2019/09/30/small-firms-may-have-a-new-way-to-offer-401k-plans-to-their-workers.html

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