Who are the Best Small Business 401k Providers?

Small business owners planning on offering their employees 401k plans can find themselves overwhelmed by options between different 401k providers. It can even be enough to put you off the idea altogether, even though you know it’s a popular employee benefit to offer.

Luckily more and more 401k companies are using technology to provide more cost effective, easier plans to attract smaller businesses. Small business 401k providers allow you to provide valuable retirement benefits to your employees, which can serve as a method of retaining employees.

So where should you start when it comes to finding a 401k provider? And what are the top 401k providers available now? Dive in with us for all the details. 

How do you find the best 401k plans for small business owners?

‍First, it’s important to have an understanding of what criteria you should be using to compare companies and determine which 401k for small business is best for you and your team. Let’s take a look at what you need to evaluate:

Business fees. 

401k plan fees can vary wildly, from below 0.50% to 2% or more, depending on the size of the plan, number of participants, and the provider.  Going with a low-cost plan is key to your plan’s success.

Even the smallest increase in a fee (such as a few tenths of a percent higher than it needs to be) can highly decrease how much you and your employees end up with in your account when it comes time to retire. Make sure you’re getting charged the lowest fee possible.

Ease of use. 

Many business owners avoid even the best 401k providers because they’re simply too complicated. However it’s hard to get around the complexity of retirement accounts because of how strictly they’re regulated and how important it is to run them properly to stay compliant. 

Reduce your own personal headache by finding the best 401k for small business owners that takes on the complex and tedious obligations and assumes legal responsibility for your investment fund lineup. 

Read on for a few popular 401k companies that are leading the pack by providing great, affordable retirement plans, but also leading in customer service by taking on obligations that would normally fall on you such as administrative services and investment fiduciary duties.

Flexibility. 

A 401k for business owners should have flexibility in:

• Investment options: With the tens of thousands of investment products such as mutual funds and index funds out there, savvier small business owners and employees may want to expand outside of the simple index funds lineup. It’s important that they have access to the plethora of investment options so they can reach their portfolio goals.
• Plan design: Your plan design consists of the type of 401k plan you’re getting (such as Traditional, Simple IRAs, etc.), eligibility, employer contributions, vesting, and more. If your plan has too many limitations in these categories, it might decrease employee participation or even increase your costs.

Employee experience. 

You should evaluate the employee experience of a provider’s retirement plan by looking at how they help with:

• Participation and savings rates: Your retirement plan will undergo compliance testing every year (as required by the IRS) to ensure that it’s not just your highest-earning employees that are reaping the benefits in their accounts. You’ll have to refund your highest-earning staff members their contributions if your plan fails the test, and they won’t be able to max out their contributions. Your provider should make sure this doesn’t happen by maximizing participation and employee contributions.
• Financial wellness: Your plan should (at the very least) make employees feel like they’re on the right track to saving enough for retirement. While your provider should offer services including investment advice, they should also be able to assist in other personal finance areas to increase the success of your retirement plan.

Now let’s take a look at a few small business 401k providers and see what their plans include and how they compare when it comes to the above criteria.

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Who is the best 401k provider? 

Just like when choosing a healthcare plan, choosing the best 401k companies for employers is not a one-size-fits-all process. Factoring everything from budget to employer size, there may be features some small businesses benefit from that others don’t find helpful at all. That’s why we’ve provided a list of options with their pros and cons so that you can make an informed choice for your team. 

ForUsAll

Employer pricing: $1,440+$72/employee/year 

Advisory fee: 0.2-0.4% annually

ForUsAll’s automated compliance and administration software aim to almost entirely reduce the headache of running a 401k.

The company offers help in areas ranging from enrolling new employees and depositing contributions to large plan audits. The software runs 44 unique validation checks when you use your payroll service to make sure no errors have occurred, and the company’s team of administrators will work to resolve any errors that do arise. You’ll be notified of these occurrences and more on your fiduciary dashboard.

ForUsAll also comes with a virtual advisor named DAVE, who gives advice and offers easy-to-understand education on the plans. Your employees will also be communicated with frequently in an effort to increase participation and savings. ForUsAll provides holistic financial wellness and 401(k) advice to your employees via 1:1 advisory sessions and webinars, alongside a broad range of personalized communications and online tools. 

Guideline

Employer pricing: Guideline has three plans to suit small businesses of all sizes, with more features to accompany the pricier plans. The Starter plan is $39/month + $4/employee/month; the Core plan is $89/month + $8/employee/month; and the Enterprise plan is $149/month and an active participant fee.

Advisory fee: None 

Guideline is a startup that’s designed to be a modern 401k built for startups and small businesses. Instead of paying separate charges 401k providers often require for record-keeping and administration services, employers are only required to pay a monthly fee per employee. Guideline tailors your plan design to fit your needs.

You can choose from a Traditional, Roth or Safe Harbor 401k and even set up profit-sharing options that allow you to make discretionary year-end contributions (as tax-deferred bonuses) to your employees’ accounts, as well as matching options to increase participation.

Both employers and employees will get a dashboard that makes managing 401ks even easier. As an employer, you’ll be able to view your employee roster, conduct non-discrimination testing, view your document library, and get support from a team of administrators. Employees will be able to use the dashboard to check their balance, contribution rate, recent activity and get important notifications.

Human Interest

Employer pricing: Human Interest offers three plans, with each escalating price point offering more features. Their Essentials plan is $120/month + $5/employee/month; their Complete plan is $160/month + $7/employee/month; and the Concierge plan is $200/month + $9/employee/month. 

Advisory fee: Inquire with sales.

Human Interest’s website says they are the first 401k with 3% cash back on contributions. 

Human Interest is designed to be a great fit for small and midsize businesses, and offers automated administration, payroll sync and record-keeping, as well as automated signup and onboarding for all employees.

They also handle all of the document preparation and filing with the IRS so you can stay compliant, as well as participant disclosures, annual plan notifications, as well as non-discrimination testing and monitoring.

With their most robust plan, you will also receive full account support and customization with a dedicated account manager. Your manager will provide a flexible plan design as well as an easy conversion process for employees who already have existing plans. Human Interest also offers Spanish-language support.

Employee Fiduciary

Employer pricing: $1,500/year for up to 30 employees, with $30/employee/year for each additional employee. 

Advisory fee: .08%

Employee Fiduciary is a small business that “believes that every dollar spent deserves a measurable return on investment” and offers low cost 401k plans to small businesses.  Employee Fiduciary is a full-service provider that offers comprehensive setup services and works to get your plan tailored to your goals with a plan design consultation.

This consists of matching a plan to your company’s goals, preparing all of the necessary documents, and training you on the website and payroll upload. Employees’ existing plans will also be transferred as part of the setup process. You will be assigned a “dedicated relationship manager” that will help you with anything you need so you don’t have to stay on hold while waiting for someone at a call center to assist you.

Your manager will help with administration duties such as maintaining compliance, completing non-discrimination testing, and calculating year-end contribution allocations. You will also be provided with record-keeping services such as updating share prices and account balances daily, processing plan trades, preparing benefit statements, maintaining participant loans, and providing fee disclosure notices.

Ubiquity

Employer pricing: With three plan options, Ubiquity’s Saver(k) plan comes in at $97/month; the Custom(k) plan is $177/month; and the Reserve(k) plan is $257/month, with each plan adding features as the price increases. 

Advisory fee: None 

Ubiquity offers uncomplicated, easy 401k plans for a flat fee. 

Instead of simply providing investment choices in which they have a vested interest like many companies do, the company prides itself on its ability to provide investment flexibility if you want it, and strategy guidance if you need a little more structure. 

They aim to make compliance as easy as possible with electronic statements, tax filing and plan document preparation, participant disclosures, annual plan notifications, IRS testing and monitoring, and eligibility notices. You will also have access to intuitive technology that will protect you against errors.

Benefit you and your team before retirement with Homebase. 

Now that you know how to find the best 401k providers for small businesses, you’re ready to choose the best fit for your team. But once you’ve purchased your plan and put it in place, you’ll need to find a way to communicate about its significance to your team. From your job postings, to your onboarding package, to keeping current employees updated, you’ll want to make the benefits clear to everyone you work with.

That’s where Homebase comes in. With our all-in-one hourly team management app, communicating with your team will be a breeze, and you can include your 401k details in all your hiring and onboarding information. With Homebase payroll, you can automate benefits deductions so that your employees’ 401k contributions are easily processed. Get started today to see how Homebase can make work easier for you.