The 8 Best 401(k) Providers of 2021
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It's a common belief that 401(k) plans are only for large employers. This is untrue; even if you have a small business, you might want to offer your employees a sound savings plan that will cost you less.
When you're looking for a 401(k) plan for your firm, you should consider the many aspects that make a plan a good one. How the plan is funded and if it is stable are two vital factors you should look for. It should also have customer service that is friendly and available; the agents should also know how to help you if there are any problems with your plan.
Small business 401(k) plans are made to meet the needs of small businesses. No matter what form your business has (such as a sole proprietorship), there is a 401(k) plan for you that is less of a burden on your budget.
We found eight 401(k) plan providers and have listed some of the best features they have for small employers.
Not many names are as well known in the financial industry as Charles Schwab. Charles Schwab offers Index Advantage 401(k) plans with low fees; it also has some other plans you can choose from.
You can get plan advice and access to accounts that offer interest through the Schwab Bank. Its plans have no annual fees; plan members get full access to all investing services.
If you're self-employed or own your business, you can pay into an individual 401(k) plan. These plans offer many of the same benefits as a traditional 401(k). One great thing about the individual 401(k) plan is that you can direct where you invest your money.
This plan has monthly service fees that vary based on your needs. Payments into your plan are tax-deductible, and gains are tax-deferred.
All Charles Schwab plans come with planning help and 24/7 service and support.
Employee Fiduciary has low fees for its 401(k) plans. The firm invites you to compare their 401(k) plan against your current plan. It claims to have the same choices as larger firms but with lower fees.
You'll need $500 to open a plan or $1,000 to convert an existing plan. There are more than 377 mutual funds and ETFs to choose from. It also gives you access to a broker through TD Ameritrade. The fees for its 401(k) plans are low, and it provides tax return forms and annual report summaries.
The company also sends out benefit statements and has a toll-free number for plan members that need help. Low-cost investment options include Vanguard funds, index funds, and Exchange Traded Funds (ETFs).
If you own a small firm and are looking into 401(k) plans but also need a payroll service, Paychex has what you need. It has an all-in-one service for small employers with a fine reputation. Paychex's lower-cost options are a nice break from some of the more expensive 401(k) providers.
Paychex also has HR services and benefits administration that you can use for your business. Business loans and other services also make up part of its services.
It is mainly an HR/payroll services company. However, it has teamed up with other 401(k) providers for you and takes care of your plan administration. If you choose to use its tax services, you'll find it charges some extra fees for dealing with tax forms and tax services.
For one fee, Paychex makes for a less costly option for small companies that need more than one service.
Paychex has more than 100 offices around the country. Its customer support lines are open 24/7, making it easy to contact someone when you need help. Small employers are billed based on the number of workers and the number of pay periods each year.
Best for Combined Services: ADP
ADP is another 401(k) provider that offers combined services for small employers. It offers 401(k) plans, payroll, insurance, human resources, tax filing, and other services. It specializes in small companies with up to 49 plan members and offers several 401(k) plans for businesses.
Advisor services are available to help you select the suite of products your company needs. Employers who switch to ADP from another firm have the option to transfer their plans over.
The 401(k) plans offer flexible options to invest in many mutual funds or other investment types. They offer three investment portfolio samples to help members choose:
- You can choose from a basic sample line-up for investors with little desire to manage their experience.
- A standard sample line-up helps investors who want to be somewhat involved in the experience.
- An advanced sample line-up helps you pick funds or investments that give you more options to tailor and manage your plan.
Investors can ask for help when choosing a plan or ask that a plan is chosen for them. Once enrolled, there is a useful mobile app that allows access to accounts from all devices.
Vanguard is one of the largest mutual fund brokers in the world. It offers several low-cost 401(k) options that include mutual funds and ETFs. Vanguard does not provide any other services besides the financial aspect of the plans and funds.
It offers target-date funds, which allow you to choose plans that meet your needs. The target-date funds are less pricey than many other broker plans; the fund planners design them to maximize earnings.
Vanguard does not handle its own 401(k) customer service—which is taken care of by the 401(k) plan staff. If you already have a plan administrator, most of Vanguard’s services are easily integrated. This makes it a less costly choice for 401(k) investment options.
T. Rowe Price is a respected name in retirement planning. It has been in business for more than 80 years. These 401(k) plans are a great choice if you're an employer with less than 1,000 people on your books.
T. Rowe Price offers over 100 no-load mutual funds and common trusts. It also has more than 5,400 non-proprietary funds. It designs its low-cost mutual funds to give you steady returns; over 75% of these funds have expense costs lower than the industry average.
In addition to its 401(k) plans, T. Rowe Price offers 403(b) plans for nonprofit and tax-exempt organizations such as hospitals, churches, and schools. The 403(b) provides an effective way to save.
T.Rowe Price's mutual fund options include stock funds, bond funds, and target-date funds. There are also asset allocation funds and money market funds to choose from. These mutual funds have low fees, and their expense ratios are below the industry average.
Fidelity Investment is a privately-owned broker and 401(k) plan provider. It offers various services that include plan staffing, record-keeping services, and trading and investing advice.
Fidelity's plans are perfect for public and private companies that have more than 20 employees. If you're looking for a full array of services (plan administration, record-keeping), it has much to offer.
Plans offer tax-deferred growth, and contributions are tax-deductible. You may choose to match contributions if you have the means, and plan members have the option to use its loan services.
In addition, it offers programs that teach people about retirement plans and how to make the choices that are best for them. They can learn about 401(k) plans, mutual funds, ETFs, stocks, bonds, and target-date funds.
The firm has small-business retirement experts on-call to help you select the right 401(k) plan if you need it.
It also offers 401(k) retirement plans for the self-employed. These plans offer many of the same benefits as a standard 401(k) and include tax-deferred growth and tax-deductible contributions.
The great thing about a 401(k) plan from American Funds is that you can tailor it to fit almost any type of business. Start-ups, mergers, and well-established firms can create retirement plans using its services.
American Funds has a variety of 401(k), including traditional and Roth IRAs, mutual funds, and objective-focused mutual funds.
It also has several retirement plans available, including growth funds (to maximize long-term growth of capital) and growth-and-income funds (which provide the potential for capital and income growth).
Other funds available are equity-income funds (which earn above-average current and long-term income) and balanced funds that look to conserve capital and create current and long-term growth. You can also invest in stocks, bonds, and other fixed-income securities.
The firm also offers access to bond funds, which seek to create fixed income with capital growth as a secondary goal. It has cash-equivalent funds that provide income on cash reserves while preserving capital and has retirement income portfolio series that maximize income, growth, and capital preservation.