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What 401(k) Plan Services Your Business Will Need and Value

By Stuart Robertson

When researching providers to start your first 401(k) plan (or switch from a provider that is lacking), you may be unsure what services to expect or are really needed for that matter. We believe the best providers pair great people with great technology to meet and exceed your needs while keeping costs in check. Some will be good in one area and weak in another. At ShareBuilder 401k, we say demand both!

Here are the core 401(k) services you need to know about, and what you will want to ensure your provider will offer:

401(k) Provider Services Overview
Service What You'll Want What to Avoid
401(k) Advisors Salaried professionals (SEC licensed advisor is preferred) that provide expert guidance on 401(k) plan design and investing for retirement. 100% commissioned sales rep, financial rep who does not specialize in 401(k)s, and/or those that earn their income on 12b-1 pass through fees from investments. Earning 12b-1 fees on funds can bias investment “recommendations” and may increase investment expenses.
Digital Purchase and Setup A digital process enables quick purchase and efficient setup so you can get up and running. Paper-based setup is surprisingly common and can take literally weeks to complete with the back and forth.
Education and Kick-off A mix of digital and personal education for you and your employees including: 1) 401(k) advisor hosts an employee education kick-off, ongoing questions and hosts other meetings as you desire, 2) Digital guides, videos, and calculators for 24x7 education access for employees, and 3) Blogs and proactive education emails. To best manage your plan and support you and your employees, missing any of the items listed in “What You’ll Want” can leave you managing more questions or worse as employees may make bad decisions. Some providers may even want to charge you for having people support your plan.
Call Center 800# and Email Support You’ll want your provider to offer an 800# line for your employees with a strong service level (e.g. 80% of calls answered in 20 seconds or less) during business hours as well as reply to most emails same day and no later than within 24 hours. Unfortunately, some providers have your employee calls go to voice mail and may not return your call or email for days. We suggest avoiding these.
Employer/Plan Sponsor Technical Hotline You may need support streamlining payroll with uploads or integration, reviewing plan compliance testing, and/or year-end digital questionnaires. An 800# hotline makes it simple for you to knock these items out when they arise. We suggest you’ll want to ensure your provider offers this as it can be frustrating to complete tasks like these when they arise if you choose one without it.
Investment Management Expertise Some providers have a professional Investment Committee that manage the investment roster for your company’s plan. This service is known as an ERISA 3(38) advisor and it's the highest level of service in terms of fiduciary role and work a provider can take on for your investment offering. This saves you the time, energy and expense of managing these reviews on your own and provides added fiduciary protection for you and your business too. While you can take this on yourself or go with a provider’s “suggestions,” it means you take on added risk and duties to support the investment offering in your plan. Many employers don’t have access to the financial tools, experts, or other resources to do this at a high level.
Compliance, IRS Testing & Audit Support 401(k) plans have rules and regulations to manage to and must be run in compliance including annual IRS tests. Plans with over 100 employees require audits. A team and access to tools to ensure your plan is compliant are the preferred solutions for most. A good provider will also provide you a signature-ready form 5500 each year (Solo 401k plans won’t require testing and won’t require 5500 until they have $250K in assets). Providers that provide limited or no support to run your plan in compliance.

Look for a 401(k) provider that provides you a high level of service and keeps employee investment and fund expenses all-in well under 1%. This helps make your 401(k) benefits easy to run and helps ensure more of your retirement money is staying invested in the markets for tomorrow too.

Visit our services tab to get a deeper view of the support you’ll likely want.


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