FRC estimates that the product sales – aimed at owner-only businesses – have generated $1.5 billion in assets as of year-end 2003 and will have an asset pool twice that size at the end of 2004.
Following the entrance of dozens of providers into the individual K arena in 2003, FRC predicts 40,000 to 50,000 new plans will be adopted in 2004, as financial advisors and small-business owners become more aware of the benefits of the plans, which also include the ability to consolidate multiple retirement accounts and to take loans.
The success of the individual K plan stems from the ability for small business owners to make larger contributions to them ($41,000 in 2004, excluding an additional $3,000 catch-up contribution available to those age 50 or older) at lower income levels than they could in any other defined contribution or IRA-based retirement plan, FRC said in its research report .
Chris Brown, vice president and Director of Retirement Market Research at FRC, said that the plans are designed for a “vast and growing” niche, including millions of highly compensated self-employed professionals, such as doctors, lawyers, and real estate agents.
“With just 50,000 Indy-k plans adopted to date, investment manufacturers and distributors still have an opportunity to get in during the early stages of what will be a rapidly accelerating and increasingly lucrative market,” Brown said in an FRC news release.
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