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Top 401K Plans For Small Businesses

Hiring and retaining talented people for your business can be challenging but offering one of the top 401K plans for small businesses can help. Here’s our guide.

Factors To Consider When Picking A Top 401K Plan

Here are some factors to consider when picking a top 401K plan.

  • Matching Contributions - Your contribution to the plan is an important tool for recruiting and retaining talented employees. You can offer a match that is a percentage of an employee’s contribution, up to a specified percentage of their salary, or you can provide a match up to a certain dollar amount. 
  • Profit-Sharing - This allows you to set aside a portion of your pre-tax profits in employee retirement accounts. You can choose to contribute a certain dollar amount or a percentage of each employee’s salary. 
  • Costs - 401(k) plans have fees you’ll need to consider. Fees can include recordkeeping fees, investment fees, and transaction fees. Fees can change if you hire more employees and your plan grows. 
  • Investment Options - Look for a 401(k) plan that provides a variety of investment options for your employees. A good plan should offer large and small stocks, different types of bonds, some broad-based international exposure, and emerging markets.
  • Provider - You’ll want financial experts, such as trustees and custodians, to help you navigate the issues and decisions that come with starting and maintaining a plan. Some plans include third-party administration services, such as plan design and documents, testing, and tax preparation, others will require you to work with an outside TPA. 

Top 401K Plans For Small Businesses

Here are some providers that specialize in 401(k) plans for small businesses:

  • ADP - Extends all its services and expertise to small businesses. ADP’s retirement planning service gives you access to a team of professionals who help you browse, choose and customize the best retirement plan for your business. ADP also offers SIMPLE and SEP IRA options, and tiered investment options. Your ADP advisors will help you design a retirement plan and then implement and manage it. 
  • Betterment for Business - Human advisors and technology help you design 401(k) plans and advise employees on the smartest investments they can make in a variety of ETFs to optimize their retirement savings. They’re a certified fiduciary so they’re required to act in your best interests when giving investment advice. Only use if you are comfortable using a robo-advisor and managing your plan digitally. 
  • Charles Schwab - Provides 401(k) plans for any size company and creates plans customized plans to your needs. A good option if you aren’t comfortable with a robo-advisor. Charles Schwab offers a managed account service that gives your employees personalized advice on investment options and provides ongoing account monitoring, and automatic adjustments. They also offer SIMPLE and SEP IRA plans, and individual 401(k) plans. 
  • Fidelity Investments - Fidelity can service businesses of all sizes with a 401(k) plan that offers many investment options. They also have comprehensive advisory services, administrative, reporting, and compliance support. Advisors who will help you design a plan are available in person, online, or over the phone, or you can work with your current broker. There’s also an app and online dashboard to view and manage plans and get in touch with advisors.
  • Merrill Edge - Independent advisors select and manage funds and model portfolios. You can convert your existing 401(k) plan to a Merrill Small Business 401(k). The Merril Small Business 401(k) is suitable for corporations, partnerships, and nonprofits, and they offer SEP-IRA, SIMPLE IRA, and Individual 401(k) plans for sole proprietorships and self-employed individuals.
  • ShareBuilder 401k - Allows small businesses to buy and set up low-cost 401(k) plans online. They are a fiduciary so they can offer investment advice, manage portfolios, and handle plan administration. Their options are the Solo 401(k), Safe Harbor 401(k), Traditional 401(k), and Tiered Profit-Sharing 401(k). Investment options include index ETFs and model portfolios.
  • T. Rowe Price - They offer a SEP-IRA, SIMPLE IRA, and Individual 401(k) for self-employed individuals or businesses with under 100 employees and a 401(k) for Small Business for businesses with up to 1,000 employees. The 401(k) for Small Business plan offers both no-load mutual funds and non-proprietary funds. They provide 24/7 phone support and an online portal to manage their plans and make transactions.

If you want to know more about financial products for your business, read our article How to Choose the Right Credit Card for Your Small Business, or contact us.

Tags: 401k plans, small business

Geoff Strauss

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