B ig or
practical for all
and knew exactly what he wanted in a 401(k).
The ShareBuilder plan ultimately satisfied his major objectives, including meeting
his tax benefit needs, providing good diversification, having a reasonable fee structure,
being convertible should he take on employees and being easy to manage.
Lonnes also found having everything
online a major selling point. “It’s very easy to
log on as the employee and get your statement, and not just the monthly statement. I
don’t care much about checking month-to-month, but I do like this feature for simply
checking year-to-date performance.”
Small businesses can
offer big retirement benefits
By David Wight
LAST YEAR, SHAREBUILDER introduced
Costco members to a cost-effective 401(k)
plan designed for small businesses. Gone were
the hidden broker and transaction fees frequently associated with 401(k) plans, replaced
by a user-friendly, accessible online approach
with an easy-to-comprehend fee structure
and no mystery about what the plan actually
costs employees and employers.
This service has been well received by
the members who have enrolled. Here is
what a few had to say about their experience
with the program.
recalls from his Redondo Beach, California,
office. “ShareBuilder was very helpful by
assuring me that what I wanted to achieve was
possible with their plan.”
This is a second career for Lonnes, an MBA
and former partner in a large consulting firm.
He is quite comfortable in a hands-on role for
all his own tax and financial management,
Just as easy for more
For Lilly Hernandez Arce, it was time to
move her family-owned and -operated
business into having a 401(k) plan as a
benefit. Founded by her parents in 1982,
H & H Ornamental Iron is based in Palm
Desert, California, and has six employees.
Her mother is still active as president.
“I haven’t had any retirement benefits
in the 10 years I’ve worked here,” says Arce.
“So the timing was right when I picked up
a brochure for the ShareBuilder program
on one of my biweekly visits to Costco.”
It was the ease of setting up a plan that
made such a favorable impression on her.
“We had been dreading this, thinking
that setting up a 401(k) plan was going to be
a really major production,” she says. “But it
was so simple to set up with the assistance of
ShareBuilder—they walked me through the
whole process and made it very easy for me to
understand each step. And now it’s routine to
log on and manage the plan when I do the
payroll every week.” C
401(k) myths versus reality
Company of one
Michael Lonnes is the sole proprietor of
West Coast Propeller Inc., and designs, installs
and maintains electrical and mechanical systems for yachts. He had already been won
over by other Costco services—credit-card
processing and check printing—so he was
optimistic about ShareBuilder’s unique
401(k) plan for a one-person company.
“I knew something like that was possible,
but I wasn’t sure if I could fully leverage the
tax advantages the way I wanted to,” Lonnes
To learn more about ShareBuilder 401(k)
plans, go to costco.com and enter
“401(k)” in the search box, or call toll-free
SHAREBUILDER recently commissioned a
survey of small businesses that revealed
many misperceptions about 401(k)s. Here’s
a debunking of the top five 401(k) myths.
Myth 1: Employer doesn’t have enough
employees for a plan.
Reality: One employee—a sole proprietor, for instance—is the minimum size.
Should the number of employees change,
it’s easy to convert the plan to accommodate more participants.
Myth 2: Employer must offer matching funds.
Reality: Matches are at the discretion of
each company and can be made when business is good and not when times are tough.
Myth 3: The plans are too hard for a
small business to manage.
Reality: Small-business 401(k) plans
take about 30 minutes to set up and provide
easy self-serve features to employers and
employees for checking or managing
Myth 4: The plans are too expensive
for a small business to justify.
Reality: Business owners are usually
surprised to learn that it costs only a fraction of what they expected to set up a plan.
The potential tax credits and the impact of
tax-deferred savings help the plan nearly
pay for itself.
Myth 5: There’s no urgency to start a
plan—it can be done eventually.
Reality: The earlier retirement savings
are started, the more savings can be
Survey source: ShareBuilder 2007 Small Business Annual Retirement Trends Survey. ShareBuilder does not represent that every
consumer will have a similar experience. These stories should not be considered investment or tax advice, or a guarantee of future
performance or success. Advisory services are provided by ShareBuilder Advisors, LLC, a registered investment advisor and a
subsidiary of ING Bank, fsb. 401(k) plans are not FDIC insured or bank guaranteed, and may lose value.