The pension reform bill signed into law earlier this year will open up a new customer base for retirement plans: companies with no employees.
Thats a market estimated at 15.4 million people, including one-man-band business owners and contingent workers. Among the providers taking note is Boston-based Pioneer Investments, which plans to delve into the owner-only market in January with its new Uni-K product. Marcy L. Supovitz, the firm's senior managing director of retirement plans, says Uni-K will be more affordable and grant more flexibility than simple IRAs or money purchase plans.
When fully implemented next year, the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) will give small businesses more generous tax advantages when they set up 401(k)s, including higher deduction limits and separate salary deferrals, boosting the allure for owner-only companies.
Not only will business owners be able to put aside more money for retirement, Supovitz said, they wont have to adhere to a yearly minimum contribution or undergo complex discrimination testing. Moreover, they wont be penalized for taking plan loans.