How to Pick a 401(k) Provider

LAST REVIEWED Apr 29 2020 9 MIN READ

By The Human Interest Team

For business owners interested in providing employees with 401(k) plans or employees with a current plan needing guidance, the following information can help answer some of the basic questions and concerns.

Advantages of Using a 401(k) Provider

There are many benefits for an individual to have a 401(k) plan. This is true for those who are self-employed as well as employees. Self-employed people or business owners have the option of contributing to individual versus traditional 401(k) plans. There are several highly rated companies that offer 401(k) plans to choose from, and each has its own benefits.

Business owners have several options available that are specific to their needs as a business and their employees when it comes to 401(k) plans. It does not matter the type of business you are operating — partnership, corporation, sole proprietorship, or a Limited Liability Company (LLC) — you will find 401(k) plans to provide your employees with affordable solutions for their retirement.

Several things for employers to consider when choosing a 401(k) provider is the status of the company itself. This means taking into consideration the health of the company in the areas of funding, the stability of the company, the company’s financial structure, and their interaction and communication via customer service. 

Common Retirement Plan Providers

Charles Schwab

When researching top 401(k) providers, you’re sure to come across Charles Schwab. Due to their reputation and recognition as one of the leading retirement plan providers, this company has made its mark in the world of 401(k) plans.

As retirement plan providers go, Charles Schwab touts low operating and administrative costs. They offer both 401(k) plans and Exchange-Traded Funds (ETF) options are available. Their retirement programs include access to an advisor and the options are subject to accruing interest when they are set up through Schwab Bank.

Setting up a plan with Charles Schwab include tax-deferred earnings, tax-deductible contributions, resources to guide the retirement-planning process, and available support and service 24 hours a day, seven days a week.

Employee Fiduciary

Many businesses rely on 401(k) management companies to set up, manage, and administer the plans. One such company is Employee Fiduciary. 

Employee Fiduciary offers a variety of advantages to employers and encourages employers to research other 401(k) account companies and make comparisons between them. Employee Fiduciary claims they can offer low fees for the same choices in investment plans offered by larger organizations.

They also to provide additional services that include providing a statement of benefits, tax return forms, summaries of annual reports, and a toll-free number for those needing assistance who participate in the plans. Depending on the type of investment plan the business is interested in, Employee Fiduciary offers a choice of low-cost options such as index, Vanguard, and Exchange Traded Funds.

ADP

ADP offers many services to employers who take advantage of their 401(k) plans, including; handling the company’s payroll and insurance, human resources, help with filing taxes, and other administrative services.

ADP offers flexible investment options for 401(k) plans that are available from more than 130 leaders in the field of investment management. Three tiers break down the available levels. The first is the basic level for those with limited knowledge of investing. The second is the standard level for those with middle-of-the-road investing experience. The third level is for advanced investors who have advanced knowledge and experience.

T. Rowe Price

Businesses with 1,000 or fewer employees might want to consider T. Rowe Price. For over 80 years, the company has provided plans for investment and retirement services earning it a respected reputation.

With T. Rowe Price, businesses have access to over 5,400 non-proprietary funds and more than 90 common trust and/or mutual funds. The company offers a variety of investment options for its mutual funds, such as money market, bond, asset allocation funds, and more.

The company is not limited to 401(k) plans. Employees of organizations that are tax-exempt or nonprofit can also prepare for retirement via 403(b) plans offered through T. Rowe Price.

Fidelity Investments

Another company offering plans for self-employed individuals is Fidelity Investments. Their retirement plans offer many benefits including tax-deductible contributions and tax-deferred growth. The company helps individuals, even more, select the self-employed plan that suits their situation by providing an on-call retirement specialist to answer any questions.

Businesses interested in companies offering consultant services may consider Fidelity Investment as a good choice as a 401(k) plan provider. Their 401(k) administrator list of services include investment and trading advisement, administration of the plan, and record keeping.

American Funds

American Funds focuses on plan flexibility. Whether a company is just getting started, is planning to merge with another company, or it is a company with a long-standing business presence, American Funds customizes 401(k) plans to fit the business.

With over 360,000 plans available, American Funds can offer a diverse menu of options for 401(k) plans from traditional IRAs to individual mutual funds. Their retirement plans include growth funds, equity-income funds, and balanced funds.

Human Interest

Human Interest in a Silicon Valley startup, relatively new to the 401(k) industry, is committed to excellent customer service with fair and transparent pricing. An investment platform for administering 401(k) plans, Human Interest is a great option for owners of small businesses open to using an online provider. Compared to other 401(k) providers, Human Interest has very low costs, partially due to its sales model of skipping over financial advisors and marketing directly to small business owners.

Switching 401(k) Providers

A business owner who wants to change providers may do so through a process called “conversion.” During the conversion, four steps must be completed: asset transfer, document preparation, selection plans, and participant enrollment.

The conversion process can take anywhere from 60 to 90 days, but this can vary. The amount of time needed by the business owner is minimal. The bulk of the time is used by the outgoing provider and the new provider. There is usually a one-time termination fee by the old provider and a set-up fee by the new provider.

Whether you’re a small business owner, employee, or self-employed and have questions about 401(k) plans, we have the answers. Let our team at Human Interest help you find the resources you need to make your business grow. Human Interest offers full-service 401(k) plans at low-cost and affordable prices, so you can offer your employees more and save more.

We believe that everyone deserves access to a secure financial future, which is why we make it easy to provide a 401(k) to your employees. Human Interest offers a low-cost 401(k) with automated administration, built-in investment advising, and integration with leading payroll providers.

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