T. Rowe Price has launched a new 401(k) plan targeting sole proprietors who typically sock away retirement savings in SEP-IRA or profit-sharing retirement plans.
The fund providers new plan offering suggests that larger financial service providers are paying more attention to the growing number of small businesses as a way to expand their 401(k) market share. A growing number of mutual fund providers like Pioneer Investments also offer individual 401(k) plans.
The main selling point for T. Rowe Prices new plan is the recent tax law change increasing annual 401(k) contributions to $42,000 next year from the current $41,000 limit. T. Rowe Price also points out that 401(k) plans also offer a catch-up provision for individuals who contributed less than the plan limits in previous years.
"When we looked at our existing small-business plan customers, we found that approximately one-third could benefit from the higher contribution limits associated with an individual 401(k) Plan," said Douglas Harrison, vice president and head of the tax-deferred products development and management group at T. Rowe.
The firms new plan includes at least 65 no-load mutual funds and is available without a start-up fee. Annual $10 per fund administrative charges are waived in accounts with more than $5,000 per fund or $50,000 per shareholder.