CitiStreet has started an Internet-based defined contribution plan, Success 401(k), intended for very small businesses.

The plan, introduced Tuesday, is CitiStreet’s third retirement product for small businesses. The two-year-old Quincy, Mass., company is a joint venture of the retirement services divisions of State Street Corp. in Boston and Citigroup Inc. in New York.

Success 401(k) offers plan participants a menu of preselected mutual funds. Through the Citigroup subsidiary Salomon Smith Barney, CitiStreet offers two other 401(k) plans for small businesses — the Blue Print Plan, which uses variable annuities as an investment vehicle, and K Choice, which uses mutual funds. Neither has an online component.

CitiStreet said that all three products are designed to serve a sector of the qualified plan marketplace that has been largely overlooked, companies with fewer than 100 employees.

Linda DeLoreto, a vice president and the product manager for Success 401(k), said that what may give it an edge is its LivePerson instant messaging software.

The technology, from New York-based LivePerson, lets plan sponsors speak online with financial advisers at a CitiStreet call center who can help select funds and carry out the program. LivePerson is not available to participants, but Ms. DeLoreto said that it may be in the future, depending in part on its popularity with sponsors.

With the LivePerson access bundled into Success 401(k), CitiStreet aims to reach more small businesses and ease the plan process for owners and managers.

Several banks and insurance companies, including Key Bank USA, People’s Bank, Geico, and Wausau Insurance, use LivePerson to enable existing and potential customers to ask questions about products and services while browsing their Web sites.

CitiStreet is the first company to offer an online 401(k) product with this capability.

“Real people are usually missing from the online 401(k) sale,” Ms. DeLoreto said. “There is a perception that if you are online you don’t want to deal with a financial adviser. But we want to be sure one is there if the business owner needs one.”

Success 401(k) plan sponsors are to have access to financial advisers in a dedicated call center from 9 a.m. to 5 p.m. Eastern time. But Ms. DeLoreto said that during Success 401(k)’s one-week prelaunch the service was used predominantly in the evening, so hours may be expanded.

She said that most business owners initiate a 401(k) plan without considering all the details, such as federal compliance tests. The Success 401(k) sales site explains compliance and offers a solution for passing the tests. If sponsors still need help, they can use the call center.

According to analysts, Fidelity Investments’ online 401(k) service currently leads in the small-business market. A spokesman said that its 401(k) unit manages $31.5 billion of assets for 7,500 small-business customers, 1,200 of which use its e401(k) service.

But there is plenty of room in the market, observers said.

Dennis Ceru, an analyst at the Boston research firm TowerGroup, said that 401(k) assets are expected to grow from $2.8 trillion today to $5 trillion by 2005 and that the total of participants is expected to grow from 41 million to 68 million in the same period, which means there is room for competition.

“Everyone is trying to differentiate themselves in the marketplace,” he said. “For GoldK it was a complete help desk, and for Persumma it was a supermarket of fund choices. I think there’s room for everyone now, and whoever will succeed will be the one who delivers the best product with the best pricing and servicing.”


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