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The Business of Savings
How to Select the Best 401(k) Plan Provider for Your Business
Your business is running well and you’ve begun looking for ways to ensure you put money away for later on, save on taxes now, and provide a great incentive for employees to stay engaged with your company. And you don’t want it take a lot of time or cost a lot of money.
Well, that will quickly lead you down the path to considering a 401(k) plan and finding the right plan type at the right price.
Here are the top things to consider when finding the best provider for your 401(k) plan needs:
Keep participant fees <1%. That means when you add the average fund expenses plus any management fee, participant recordkeeping fees, or other fee charged to your employees, it sums to less than 1%. It is common for fund expenses, before adding other fees, to be well over 1.5% for smaller firms.
- Choose the plan design that fits your business needs now and a provider that has options that can grow as your company evolves. Whether you need an Individual 401(k), a plan that vests over time for your employees, or want to consider advanced profit sharing options, you’ll want to ensure your provider can meet your needs today and tomorrow.
- Consider a provider that lessens your business risks of providing your plan and manages the investments available in your plan for your company. By choosing a provider that is also an investment fiduciary, they will automatically ensure the investments are managed in line with the investment philosophy (e.g. low expense fund focus, diversification, etc…) and relieve you of this responsibility.
These three considerations will help ensure you have a low-cost, easy plan to manage that is run in the best interest of you and your employees. If you want to understand more about the questions to ask providers and costs involved with a 401(k) plan, read the Cost Guide.