As a small business owner, you want to offer your employees a competitive benefits package, but you may feel overwhelmed at the prospect of an employee retirement plan. Luckily, there are many employee retirement plans on the market that are designed for even small businesses, including those with just a handful of employees. Read on to learn about our recommendations on the best employee retirement plans for small businesses and how we selected them.
"}},{"__typename":"SectionBestPicks","id":"best-picks","isInToc":true,"type":"bestpicks","megaBestPicksTopCardLimit":5,"bestpicks":[{"bullets":["Integrates with Paychex payroll","Several plan options available","Provides fiduciary support"],"description":"Paychex retirement planning services include assistance with the selection of 401(k) plans and record-keeping, as well as advisory services to assist in signup and ongoing retirement plan support. Paychex also offers mobile self-service.\r\n\r\nAmong some of the features and tools Paychex Retirement Services offers are per-pay-period investing, automatic enrollment and autoescalation, quarterly compliance testing, and loan processing and distribution.","descriptionTest":"","fullTitle":"Featured Sponsor","isFeaturedBestPick":true,"isJumpLink":false,"tabTitle":"Featured Sponsor","review":{"displayName":"Paychex Retirement Services","canonical":"https://staging.business.com/reviews/paychex-employee-retirement-plans/","id":"2cd5dee6a61831d08d960538da12bf54","url":"https://www.paychex.com/retirement-services","review":{"pros":null,"cons":null,"fullReviewTest":"Though best known for its payroll services, Paychex also provides HR services, business insurance and employee benefits – including retirement plan services – to businesses of all sizes, from sole proprietorships to large corporations with more than 1,000 employees. It also works with financial advisors. Paychex Retirement Services offers automatic enrollment options and a variety of retirement savings plans that include traditional, Roth and safe harbor 401(k) plans. It can bundle the record-keeping and third-party administration (TPA) to simplify plan management, and the company holds the title as the largest retirement plan record-keeper in the U.S. It works with your financial advisor or GuidedChoice to offer investment management and guidance to plan participants.
","fullReview":"Though best known for its payroll services, Paychex also provides HR services, business insurance and employee benefits – including retirement plan services – to businesses of all sizes, from sole proprietorships to large corporations with more than 1,000 employees. It also works with financial advisors.
\r\n\r\n
Visit our best picks page to see all of our recommendations for employee retirement providers. Check out our reviews for Paychex's payroll and PEO services to learn more about this company's offerings.
\r\nPaychex Retirement Services offers automatic enrollment options and a variety of retirement savings plans that include traditional, Roth and safe harbor 401(k) plans. It can bundle the record-keeping and third-party administration (TPA) to simplify plan management, and the company holds the title as the largest retirement plan record-keeper in the U.S. It works with your financial advisor or GuidedChoice to offer investment management and guidance to plan participants.
\r\nPaychex doesn't post any pricing information for its retirement services on its website, and we were unable to get a pricing quote or estimate when we contacted the company by live chat and by phone. The company requires that you speak to or meet with a local rep for pricing specific to your business and the type of plan you choose.
\r\nWhen you contact your local rep, you should ask about fees for both you, as the employer and plan sponsor, and for your employees, as plan participants.
\r\nPlan sponsor fees to ask about include a setup fee, monthly service fees (for record-keeping, plan administration and fund custody), investment management fees and a plan termination fee. You should also ask if there is a service contract, how long the term is and if there are any early cancellation penalties.
\r\nPlan participant fees to ask about include assets under management (AUM) and advisory fees, average fund expense ratios and trading fees. You also want to ask about incidental costs, such as loan origination and maintenance fees, distribution fees and required minimum distribution (RMD) fees.
\r\nPaychex lets you customize a retirement plan to fit your company. Each business is different, and this retirement service understands that you may have unique requirements. This employee retirement plan company works with you to structure a plan that meets the criteria you need in a quality employee retirement plan.
\r\nFiduciary support. Paychex provides plan administration and record-keeping. It gives you the option of working with GuidedSavings from GuidedChoice to meet the ERISA 3(38) fiduciary requirement.
\r\nRecord-keeping services. Paychex records and processes employee contributions to the plan.
\r\nPlan administration. Serving as the third-party administrator (TPA) of your employee retirement plan, Paychex creates and manages the plan document, checks eligibility and enrolls participants, conducts quarterly compliance testing, prepares Form 5500 for the IRS, and processes employee loans.
\r\nPayroll integration. If you already use Paychex as your payroll processor, you can directly integrate your retirement plan and payroll, streamlining administrative tasks.
\r\nReporting requirements. If you choose a 401(k) plan, you're required to file Form 5500 with the IRS. As the plan administrator, Paychex prepares this form for you.
\r\nInvestment options. Paychex says it offers thousands of investment options, including model portfolios, target date funds, preselected lineups and broker-specific rosters from Ameriprise, Edward Jones, Merrill Lynch and Morgan Stanley.
\r\nLoans. If you choose a 401(k) plan, participants may take out loans against their retirement savings accounts. Paychex processes them as part of its plan administration services.
\r\nAccount access. Paychex's employer website for its retirement plans allows you to access information about plan investments and participants. Your employees can log in to their account dashboards to monitor their balances and manage their contributions. Paychex also has a mobile app that employees can use to access their retirement accounts.
\r\nPaychex offers customer support via phone, email and live chat. As part of our evaluation, we reached out to the company posing as a small business owner and asked several questions about its retirement plans. The representatives we communicated by chat and phone were prompt, friendly and eager to gather information about our business. But they couldn't tell us anything specific about Paychex retirement plan pricing or features. Rather, reps seek to set up meetings for its local reps. If you want to work with a company that has local reps, or if you already work with Paychex. this may be a good retirement plan provider for you to consider. But if you just want to find out if its plans have certain features or fit in your budget, you may find it time-consuming to get this information.
\r\nIf you prefer to research companies online, resources are limited. You can find general information about the retirement plans the company offers, watch a demo about its plan website for employers, read articles on its blog and use its retirement calculator.
\r\nPaychex isn't forthcoming about its pricing. It's not on its website, and when you call the company or reach out to chat online, representatives can't provide this information, but simply gather details about your business so they can put you in contact with local reps. You can't even get estimates or information on what types of fees the company charges without speaking to a local rep.
\r\nWhile we recognize that the company seeks to customize its services and pricing, and support its local representatives, its competitors make it easier to get this information.
\r\nEditor's note: Looking for the right employee retirement plan for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.
\r\nShareBuilder 401k offers the best safe harbor 401(k) retirement plan for small businesses because in addition to making this popular type of plan affordable for small business owners, it takes on the fiduciary responsibility and performs plan administration, custodianship, record-keeping and advisory services – saving you the time and expense of working with, and overseeing, multiple companies to accomplish these duties.
\r\nShareBuilder 401k specializes in providing full-featured 401(k) employee retirement plans to small business owners, from owner-only businesses to those with up to 100 employees. It offers a choice between the traditional, safe harbor and individual 401(k) plans – all plans have a Roth option for employee contributions.
\r\nThough commonly offered by large businesses, 401(k) plans used to be very expensive for small businesses; the rep we spoke with said that it previously cost between $5,000 and $10,000 per year to run this type of plan. Luckily, there are now plan providers like ShareBuilder 401k that have small business 401(k) retirement plans with lower costs. Here's what you can expect to pay.
\r\nSafe harbor 401(k). If you're switching to ShareBuilder 401k from another plan and rolling over $500,000 or more in plan assets, you may be eligible for lower setup, administration, and asset management fees than those listed here. Also, as your plan assets increase, your administration costs decrease; they're typically free for plans that reach or exceed $5,000,000 in assets.
\r\nTraditional 401(k). As with the safe harbor plan, you may be eligible for lower fees if you're rolling over assets of $500,000 or more. Likewise, your administrative costs may be waived when your plan reaches $5,000,000 in assets.
\r\nOwner-only 401(k). Also called an individual 401(k) or solo 401(k), this plan is only for business owners with no employees. Businesses with multiple owners are eligible, as are owners' spouses who work for the business. Pricing may be waived for plans that have $250,000 or more in assets.
\r\nIncidental plan sponsor fees. There are several fees for nonstandard services that are only charged if you these services. For example, if you need your IRS Form 5500 amended, it costs $100. Or, if you switch from a traditional 401(k) plan to a safe harbor 401(k), you would pay a $250 product migration fee. The full list is available on the company's website.
\r\nPlan participant costs: For all three plan types, participants pay the following fee.
\r\nIncidental participant costs: There are also fees for specific participant events. A full list of these fees is available on the webpage link above.
\r\nSafe harbor 401(k)s differ from traditional 401(k) plans in that they require employers to match or contribute a certain percentage to employee accounts, and contributions are immediately vested; matching and vesting are optional with traditional 401(k) plans. These Safe Harbor rules satisfy the IRS's nondiscrimination requirements, allowing business owners and highly compensated employees to make maximum contributions to their own 401(k) retirement accounts.
\r\nHere's a sampling of what ShareBuilder 401k offers with its Safe Harbor 401(k) plans.
\r\nFiduciary support. ShareBuilder 401k serves as the plan administrator, custodian, record-keeper and ERISA 3(38) investment manager. As the plan sponsor, you oversee payroll contributions and complete a year-end checklist.
\r\nAccount setup. To get started, you can fill out an online form and have an advisor call you, or you can call the company to immediately speak with an advisor. He or she will provide you with a quote specific to your business and go over plan details with you. You can then begin filling out the online plan paperwork. Your advisor can walk you through the setup process if you need help. It then takes a few weeks to roll out the plan.
\r\nInvestment options. Participants can choose from five managed portfolios, or they can customize their portfolio from ShareBuilder's selection of low-cost, exchange-traded funds (ETFs) from Vanguard, iShares, PowerShares and State Street.
\r\nFund research tools. On the company's website, you can view the roster of ETFs and managed portfolios. Each fund is linked to a Morningstar profile with information about the fund's strategy, historical performance, asset allocation and other details.
\r\nAdvisory services. ShareBuilder 401k has an investment committee that helps plan participants diversify their investments by managing its model portfolios and investment roster of ETFs.
\r\nReporting requirements. For both safe harbor and traditional 401(k) plans, you're required to submit the IRS Form 5500. The individual 401(k) plan carries this requirement as well, once your plan assets are $250,000 or more. ShareBuilder 401k prepares the form for you so all you need to do is sign and send it.
\r\nLoans. All three plans allow participants to take out loans against their 401(k) of up to 50 percent of their account balance, though it may not exceed $50,000.
\r\nYou can call ShareBuilder 401k or fill out the form on the company's website to have an investment advisor call you. You'll work with this individual during plan setup and for plan support for the life of the plan. For other issues, you'll work with the company's administration team.
\r\nWhen we called the company as part of our testing, posing as the owner of a small business, we were quickly connected to an investment advisor who was personable and knowledgeable. He volunteered information about pricing, patiently explained the difference between different types of 401(k) plans and offered to email us a quote and additional information about the plans, which we received less than 15 minutes after our call ended.
\r\nIf you prefer to learn about the company's offerings or troubleshoot issues online, you can read the basics on the ShareBuilder 401k website, but there isn't a searchable knowledgebase, blog or other resources. You can, however, find some of this information on the ShareBuilder website, but a lot of it hasn't been recently updated.
\r\nAs mentioned above, the ShareBuilder 401k website doesn't have the same level of information as some of its competitors. This may be frustrating for small business owners who would rather find information online than call the company, but it posts its pricing, as well as a good overview of its offerings, and when we called the company, we had a positive interaction with the advisor we spoke with, who was happy to answer all our questions. It also lacks a mobile app, but the advisor we spoke with assured us that its website is mobile-friendly.
\r\n","fullReview":"
ShareBuilder 401k offers the best safe harbor 401(k) retirement plan for small businesses because in addition to making this popular type of plan affordable for small business owners, it takes on the fiduciary responsibility and performs plan administration, custodianship, record-keeping and advisory services – saving you the time and expense of working with, and overseeing, multiple companies to accomplish these duties.
\r\nVisit our best picks page to see all of our recommendations for employee retirement providers.
\r\nShareBuilder 401k specializes in providing full-featured 401(k) employee retirement plans to small business owners, from owner-only businesses to those with up to 100 employees. It offers a choice between the traditional, safe harbor and individual 401(k) plans – all plans have a Roth option for employee contributions.
\r\nThough commonly offered by large businesses, 401(k) plans used to be very expensive for small businesses; the rep we spoke with said that it previously cost between $5,000 and $10,000 per year to run this type of plan. Luckily, there are now plan providers like ShareBuilder 401k that have small business 401(k) retirement plans with lower costs. Here's what you can expect to pay.
\r\nSafe harbor 401(k). If you're switching to ShareBuilder 401k from another plan and rolling over $500,000 or more in plan assets, you may be eligible for lower setup, administration, and asset management fees than those listed here. Also, as your plan assets increase, your administration costs decrease; they're typically free for plans that reach or exceed $5,000,000 in assets.
\r\nTraditional 401(k). As with the safe harbor plan, you may be eligible for lower fees if you're rolling over assets of $500,000 or more. Likewise, your administrative costs may be waived when your plan reaches $5,000,000 in assets.
\r\nOwner-only 401(k). Also called an individual 401(k) or solo 401(k), this plan is only for business owners with no employees. Businesses with multiple owners are eligible, as are owners' spouses who work for the business. Pricing may be waived for plans that have $250,000 or more in assets.
\r\nIncidental plan sponsor fees. There are several fees for nonstandard services that are only charged if you these services. For example, if you need your IRS Form 5500 amended, it costs $100. Or, if you switch from a traditional 401(k) plan to a safe harbor 401(k), you would pay a $250 product migration fee. The full list is available on the company's website.
\r\nPlan participant costs: For all three plan types, participants pay the following fee.
\r\nIncidental participant costs: There are also fees for specific participant events. A full list of these fees is available on the webpage link above.
\r\nSafe harbor 401(k)s differ from traditional 401(k) plans in that they require employers to match or contribute a certain percentage to employee accounts, and contributions are immediately vested; matching and vesting are optional with traditional 401(k) plans. These Safe Harbor rules satisfy the IRS's nondiscrimination requirements, allowing business owners and highly compensated employees to make maximum contributions to their own 401(k) retirement accounts.
\r\nHere's a sampling of what ShareBuilder 401k offers with its Safe Harbor 401(k) plans.
\r\nFiduciary support. ShareBuilder 401k serves as the plan administrator, custodian, record-keeper and ERISA 3(38) investment manager. As the plan sponsor, you oversee payroll contributions and complete a year-end checklist.
\r\nAccount setup. To get started, you can fill out an online form and have an advisor call you, or you can call the company to immediately speak with an advisor. He or she will provide you with a quote specific to your business and go over plan details with you. You can then begin filling out the online plan paperwork. Your advisor can walk you through the setup process if you need help. It then takes a few weeks to roll out the plan.
\r\nInvestment options. Participants can choose from five managed portfolios, or they can customize their portfolio from ShareBuilder's selection of low-cost, exchange-traded funds (ETFs) from Vanguard, iShares, PowerShares and State Street.
\r\nFund research tools. On the company's website, you can view the roster of ETFs and managed portfolios. Each fund is linked to a Morningstar profile with information about the fund's strategy, historical performance, asset allocation and other details.
\r\nAdvisory services. ShareBuilder 401k has an investment committee that helps plan participants diversify their investments by managing its model portfolios and investment roster of ETFs.
\r\nReporting requirements. For both safe harbor and traditional 401(k) plans, you're required to submit the IRS Form 5500. The individual 401(k) plan carries this requirement as well, once your plan assets are $250,000 or more. ShareBuilder 401k prepares the form for you so all you need to do is sign and send it.
\r\nLoans. All three plans allow participants to take out loans against their 401(k) of up to 50 percent of their account balance, though it may not exceed $50,000.
\r\nYou can call ShareBuilder 401k or fill out the form on the company's website to have an investment advisor call you. You'll work with this individual during plan setup and for plan support for the life of the plan. For other issues, you'll work with the company's administration team.
\r\nWhen we called the company as part of our testing, posing as the owner of a small business, we were quickly connected to an investment advisor who was personable and knowledgeable. He volunteered information about pricing, patiently explained the difference between different types of 401(k) plans and offered to email us a quote and additional information about the plans, which we received less than 15 minutes after our call ended.
\r\nIf you prefer to learn about the company's offerings or troubleshoot issues online, you can read the basics on the ShareBuilder 401k website, but there isn't a searchable knowledgebase, blog or other resources. You can, however, find some of this information on the ShareBuilder website, but a lot of it hasn't been recently updated.
\r\nAs mentioned above, the ShareBuilder 401k website doesn't have the same level of information as some of its competitors. This may be frustrating for small business owners who would rather find information online than call the company, but it posts its pricing, as well as a good overview of its offerings, and when we called the company, we had a positive interaction with the advisor we spoke with, who was happy to answer all our questions. It also lacks a mobile app, but the advisor we spoke with assured us that its website is mobile-friendly.
\r\nEditor's note: Looking for the right employee retirement plan for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.
"},"pricing":{"isCapped":false,"isFeatured":false,"primary":true,"selected":"widget","widgetId":"10255","widget":{"id":"10255","cta":"Compare Quotes","isExclusive":false},"affiliate":{"cta":"Visit Site","link":"https://www.sharebuilder401k.com/","name":""}},"thumbnail":{"path":"https://staging.business.com/images/rz/5d40aefa5a215e843e8b456e/sharebuilder.png"}}},{"bullets":["No setup or plan maintenance fees","Low trade fees","Complimentary access to advisors"],"description":"Fidelity Investments offers the best Savings Incentive Match Plan for Employees – or SIMPLE IRA – for small businesses because of its lack of fees for plan sponsors and its low costs and complimentary investment guidance for plan participants. This type of plan is for businesses with 100 or fewer employees and requires plan sponsors to either match a small percentage of each participating employee's contributions or contribute a smaller percentage to all employee accounts. \r\n\r\nFidelity's SIMPLE IRAs have no setup fees, no monthly service fees, no custodial fees and no advisory fees, making this provider a cost-effective choice for businesses with tight budgets. Plan participants pay $4.95 for online U.S. equity and option trades. They also pay fund expense ratios, though commission-free exchange-traded funds (ETFs) from Fidelity and iShares are available, helping to keep these costs low.\r\n\r\nIf you and your employees are new to investing and need help picking the funds for your retirement accounts, Fidelity provides free access to advisors on its Guidance Team, who can help you select funds based on your retirement goals. You can also use the many resources that the company provides to research funds, such as its comparison tool, Morningstar snapshot, prospectus and monthly fact sheet. After you've selected your funds, you can monitor your account using the company's mobile app, which is available for Apple and Android phones and tablets and Kindle Fire tablets. ","descriptionTest":"","fullTitle":"Best SIMPLE IRA Provider","isFeaturedBestPick":false,"isJumpLink":true,"tabTitle":"Best SIMPLE IRA Provider","review":{"displayName":"Fidelity Investments","canonical":"https://staging.business.com/reviews/fidelity-investments/","id":"1ffaf0a3acc229da80f40a4526ddc57e","url":"https://www.fidelity.com/","review":{"pros":["Fidelity doesn't charge setup, monthly service, custodial or advisory fees.","Participants receive complimentary access to the Fidelity Guidance Team, who can help them choose funds based on their retirement goals."],"cons":["You aren't assigned a dedicated account manager or advisor. Instead, you contact the retirement team or the general customer support team for assistance."],"fullReviewTest":"A Savings Incentive Match Plan for Employees, or SIMPLE IRA, is a good retirement savings plan for small businesses with 100 or fewer employees. Self-employed individuals can also use it. It doesn't allow participants to save as much as 401(k) plans do and requires you as an employer to match or contribute to employee accounts, but it's easier and cheaper to set up and maintain than 401(k) plans. It also doesn't require you to submit an IRS 5500 tax form or submit to nondiscrimination testing.
\r\nFidelity Investments offers the best SIMPLE IRA plan to small businesses because it doesn't charge any setup or plan maintenance fees, and the only costs for plan participants are trade fees and fund expense ratios – and its trade fees are some of the lowest in the industry. Fidelity also provides free access to advisors to help you and your employees pick investments. Fidelity is a leading financial services corporation that provides wealth management and brokerage services. It serves 28 million individual investors and holds over $7 trillion in customer assets.
\r\nOne of the main reasons that many small business owners haven't yet offered a retirement plan to their employees is the expense – they worry that their business is too small and can't afford to sponsor a plan. If you share this concern and costs have been holding you back from offering a retirement savings plan for your employees, Fidelity's SIMPLE IRA may be the solution. Here's what you can expect to pay for this employee retirement plan:
\r\nThe only thing that you, as the employer and plan sponsor, will need to pay is either a 3% match for employees participating in the plan or a 2% contribution to all employee accounts. However, this is a deductible expense.
\r\nHere's what plan participants can expect to pay:
\r\nFidelity's SEP IRA and self-employed 401(k) plans share this fee structure. For businesses with 20 or more employees and an existing retirement plan to roll over, it has a 401(k) option; fees depend on the specifics of your plan.
\r\nSIMPLE IRA retirement plans aren't as stringently regulated as 401(k) plans. You don't have to file Form 5500 with the IRS or submit to nondiscrimination testing. However, this plan type is limited to businesses with 100 or fewer employees.
\r\nAccount setup: If you call Fidelity and speak with one of its small business retirement specialists, the company will send you and your employees enrollment packets to fill out. If you don't want to wait, you can download the forms online. After it receives your paperwork, Fidelity can set up your account by the next day, according to the representative we spoke with.
\r\nPayroll integration: Fidelity supports electronic funding of participant accounts and works with payroll providers, though some payroll companies may charge fees for this convenience. If you handle payroll yourself, you can use Fidelity PlanManager – an online plan administration tool – to process salary deferral contributions for your employees as well as employer matches or contributions.
\r\nInvestment options: Choices include bonds, exchange-traded funds, FDIC-insured CDs, mutual funds and stocks. The company notes that mutual funds are limited to those that waive investment minimums for SIMPLE IRA participants. You can view the list of eligible mutual funds on the company's website. In addition to Fidelity mutual funds, options include well-known fund families such as Janus no-load mutual funds, Morgan Stanley and Wells Fargo. Target-date funds are available.
\r\nFund research tools: Fidelity provides a wealth of information about each fund, including a Morningstar snapshot, monthly fact sheet, prospectus and comparison tool.
\r\nAdvisory services: You and your employees who participate in this retirement savings plan have complimentary access to the Fidelity Guidance Team. These advisors can help you choose funds for your investment portfolio based on your retirement goals.
\r\nLoans: No loans are available from this type of plan.
\r\nWithdrawals: As with most retirement plans, participants can begin withdrawing funds without penalty after age 59.5. Required minimum distributions begin at age 70.5.
\r\nMobile app: Participants can manage their portfolios using Fidelity's mobile app or through an online portal. The app is available for Apple and Android phone and tablets, plus the Apple Watch, Apple TV, Kindle Fire tablets and Amazon Echo. Abilities vary by device, but on phones and tablets, you can monitor your portfolio and make trades.
\r\nYou can call Fidelity's retirement team from 8 a.m. to 8:30 p.m. ET, Monday through Friday, or the company's general customer service number 24/7. The company representative we spoke with when we called the company posing as a small business owner, provided excellent customer service. He took the time to explain what the plan is, how it works and how much it costs. After answering our questions, he walked us through the steps to set up a plan on the company's website, demonstrating how easy it is to do.
\r\nIn case you want to learn more about planning for retirement or investing, Fidelity provides multiple online resources, such as retirement-planning calculators, webinars, and articles about trading and investing, retirement planning, and personal finance.
\r\nThis type of retirement plan has some limitations that aren't specific to Fidelity. For example, all contributions are pretax only – there is no Roth option. It has a lower contribution limit than 401(k) plans, and employer contributions are immediately vested.
\r\nAs for Fidelity-specific limitations, although you can download application documents, there's no option to submit them electronically – you must mail them in, which is inconvenient. You also don't have a dedicated account manager or advisor to work with; rather, you contact the retirement team or the general customer support team for help or information about your plan.
\r\n","fullReview":"
A Savings Incentive Match Plan for Employees, or SIMPLE IRA, is a good retirement savings plan for small businesses with 100 or fewer employees. Self-employed individuals can also use it. It doesn't allow participants to save as much as 401(k) plans do and requires you as an employer to match or contribute to employee accounts, but it's easier and cheaper to set up and maintain than 401(k) plans. It also doesn't require you to submit an IRS 5500 tax form or submit to nondiscrimination testing.
\r\nFidelity Investments offers the best SIMPLE IRA plan to small businesses because it doesn't charge any setup or plan maintenance fees, and the only costs for plan participants are trade fees and fund expense ratios – and its trade fees are some of the lowest in the industry. Fidelity also provides free access to advisors to help you and your employees pick investments. Fidelity is a leading financial services corporation that provides wealth management and brokerage services. It serves 28 million individual investors and holds over $7 trillion in customer assets.
\r\nVisit our best picks page to see all of our recommendations for employee retirement plans.
\r\nOne of the main reasons that many small business owners haven't yet offered a retirement plan to their employees is the expense – they worry that their business is too small and can't afford to sponsor a plan. If you share this concern and costs have been holding you back from offering a retirement savings plan for your employees, Fidelity's SIMPLE IRA may be the solution. Here's what you can expect to pay for this employee retirement plan:
\r\nThe only thing that you, as the employer and plan sponsor, will need to pay is either a 3% match for employees participating in the plan or a 2% contribution to all employee accounts. However, this is a deductible expense.
\r\nHere's what plan participants can expect to pay:
\r\nFidelity's SEP IRA and self-employed 401(k) plans share this fee structure. For businesses with 20 or more employees and an existing retirement plan to roll over, it has a 401(k) option; fees depend on the specifics of your plan.
\r\nSIMPLE IRA retirement plans aren't as stringently regulated as 401(k) plans. You don't have to file Form 5500 with the IRS or submit to nondiscrimination testing. However, this plan type is limited to businesses with 100 or fewer employees.
\r\nAccount setup: If you call Fidelity and speak with one of its small business retirement specialists, the company will send you and your employees enrollment packets to fill out. If you don't want to wait, you can download the forms online. After it receives your paperwork, Fidelity can set up your account by the next day, according to the representative we spoke with.
\r\nPayroll integration: Fidelity supports electronic funding of participant accounts and works with payroll providers, though some payroll companies may charge fees for this convenience. If you handle payroll yourself, you can use Fidelity PlanManager – an online plan administration tool – to process salary deferral contributions for your employees as well as employer matches or contributions.
\r\nInvestment options: Choices include bonds, exchange-traded funds, FDIC-insured CDs, mutual funds and stocks. The company notes that mutual funds are limited to those that waive investment minimums for SIMPLE IRA participants. You can view the list of eligible mutual funds on the company's website. In addition to Fidelity mutual funds, options include well-known fund families such as Janus no-load mutual funds, Morgan Stanley and Wells Fargo. Target-date funds are available.
\r\nFund research tools: Fidelity provides a wealth of information about each fund, including a Morningstar snapshot, monthly fact sheet, prospectus and comparison tool.
\r\nAdvisory services: You and your employees who participate in this retirement savings plan have complimentary access to the Fidelity Guidance Team. These advisors can help you choose funds for your investment portfolio based on your retirement goals.
\r\nLoans: No loans are available from this type of plan.
\r\nWithdrawals: As with most retirement plans, participants can begin withdrawing funds without penalty after age 59.5. Required minimum distributions begin at age 70.5.
\r\nMobile app: Participants can manage their portfolios using Fidelity's mobile app or through an online portal. The app is available for Apple and Android phone and tablets, plus the Apple Watch, Apple TV, Kindle Fire tablets and Amazon Echo. Abilities vary by device, but on phones and tablets, you can monitor your portfolio and make trades.
\r\nYou can call Fidelity's retirement team from 8 a.m. to 8:30 p.m. ET, Monday through Friday, or the company's general customer service number 24/7. The company representative we spoke with when we called the company posing as a small business owner, provided excellent customer service. He took the time to explain what the plan is, how it works and how much it costs. After answering our questions, he walked us through the steps to set up a plan on the company's website, demonstrating how easy it is to do.
\r\nIn case you want to learn more about planning for retirement or investing, Fidelity provides multiple online resources, such as retirement-planning calculators, webinars, and articles about trading and investing, retirement planning, and personal finance.
\r\nThis type of retirement plan has some limitations that aren't specific to Fidelity. For example, all contributions are pretax only – there is no Roth option. It has a lower contribution limit than 401(k) plans, and employer contributions are immediately vested.
\r\nAs for Fidelity-specific limitations, although you can download application documents, there's no option to submit them electronically – you must mail them in, which is inconvenient. You also don't have a dedicated account manager or advisor to work with; rather, you contact the retirement team or the general customer support team for help or information about your plan.
\r\nEditor's note: Need an employee retirement plan for your business? Click the Compare Quotes button below to have our vendor partners reach out to you with information.
"},"pricing":{"isCapped":false,"isFeatured":false,"primary":true,"selected":"widget","widgetId":"10255","widget":{"id":"10255","cta":"Compare Quotes","isExclusive":false},"affiliate":{"cta":"Visit Site","link":"https://www.fidelity.com/","name":""}},"thumbnail":{"path":"https://staging.business.com/images/rev/prod/ce/58577-fidelity-investments-box.jpg"}}},{"bullets":["Low fees","Full-stack solution","Payroll integration"],"description":"Guideline offers the best 401(k) employee retirement plan for small businesses because it's a full-stack solution with low fees. Traditionally, 401(k) plans were unwieldy for many small businesses because, to comply with federal ERISA regulations, you had to enlist several companies to help with administration duties, recordkeeping, investment management and compliance testing. Guideline does it all, and it also serves as the ERISA 3(16) and 3(38) fiduciary.\r\n\r\nWhen you sign up with Guideline to sponsor a 401(k) plan, you don't pay advisory fees, custodian fees or assets-under-management fees. Rather, you pay a setup fee and then a monthly service fee based on the number of plan participants. There's no lengthy contract – just a document for the terms of service – so you can cancel your plan at any time. There is, however, a wind-down fee if you terminate your plan. Although it's expensive, this is a standard fee that covers the costs of transferring assets and handling the paperwork associated with shutting down a plan.\r\n\r\nThe only regular expense for plan participants is the mutual fund expense ratio for their investments. The company estimates that, on average, this is a low 0.06%. Otherwise, fees are per incident, such as if a participant makes a hardship withdrawal or takes out a loan against their investment account. \r\n\r\nGuideline offers six managed portfolios for plan participants to choose from. If participants prefer to customize their portfolios, they can choose from more than 40 low-cost index funds, including several from Vanguard. \r\n\r\nApril 2020: Guideline has updated its plans and pricing. It no longer charges a setup fee, and it now offers two plans. The Startup plan costs $39 per month, plus $8 per month, per participating employee. The Prime plan, which comes with a dedicated account manager and priority support, costs $99 per month, plus $8 per participating employee.","descriptionTest":"","fullTitle":"Best 401(k) Plan Provider","isFeaturedBestPick":false,"isJumpLink":false,"tabTitle":"Best 401(k) Plan Provider","review":{"displayName":"Guideline","canonical":"https://staging.business.com/reviews/guideline/","id":"059de862561111f86620b8ecf5e934a0","url":"https://www.guideline.com/","review":{"pros":["Guideline serves as the ERISA 3(16) and 3(38) fiduciary, and takes care of reporting and nondiscrimination testing.","Guideline makes its plans affordable for participants. It offers six managed portfolios, with a blended fund expense ratio of 0.06%."],"cons":["Some users report dissatisfaction with Guideline's customer support. To address these concerns, the company created the Prime Plan, which includes a dedicated account manager and priority support."],"fullReviewTest":"Even though 401(k) plans are one of the most popular retirement vehicles that businesses offer, small businesses often shy away from them because they can be expensive and complex to administer. Guideline is our pick for the best 401(k) plan for small businesses because it's not only one of the most affordable 401(k) options, but also one of the simplest, as it's a fully managed – or fully bundled – plan designed for small businesses.
","fullReview":"Even though 401(k) plans are one of the most popular retirement vehicles that businesses offer, small businesses often shy away from them because they can be expensive and complex to administer. Guideline is our pick for the best 401(k) plan for small businesses because it's not only one of the most affordable 401(k) options, but also one of the simplest, as it's a fully managed – or fully bundled – plan designed for small businesses.
\r\nGuideline was founded in 2016, and despite being a fairly new company, it has impressive credentials. It's raised $59 million in funding and was selected by Forbes as one of the 50 fintech companies to watch in 2019. It has more than 6,500 clients and more than $1 billion in assets under management. It partners with leading online payroll, HR and benefits provider Gusto to provide retirement plans for its clients.
\r\nVisit our best picks page to see all of our recommendations for employee retirement plan providers.
\r\nEditor's note: Looking for information on employee retirement plans? Use the questionnaire below, and our vendor partners will contact you with the information you need:
\r\n\r\n\r\n
Many small businesses cite expense as one of the reasons they haven't sponsored a retirement plan, particularly the 401(k). Guideline has low, transparent pricing for both you and your employees; you can view its rates on its website. One of the best things about its pricing is all the fees that it doesn't charge:
\r\nHere's what you, the employer (and plan sponsor), can expect to pay for Guideline's 401(k) plans:
\r\nIncidental plan sponsor fees: You may be charged some fees for nonstandard services on a per-event basis. For example, an ACH chargeback or reversal costs $50. You can view a complete list of fees on the company's website.
\r\nPlan participant costs: Here's what plan participants can expect to pay with a 401(k) plan from Guideline:
\r\nIncidental participant costs: Fees that plan participants may be charged per event include the following. You can view the full list at the website linked above.
\r\nGuideline offers traditional, Roth and safe harbor 401(k) plans, and it's a full-stack solution that does the heavy lifting on ERISA compliance for you. This is an important consideration for a 401(k) plan, because you don't want to risk liability or incur fines for being out of compliance. You also don't want to spend more time and money hiring and overseeing additional companies to handle plan administration, record-keeping and advisory services.
\r\nHere's a sampling of what Guideline has to offer, including more details on the compliance services it includes with its plans.
\r\nFiduciary support: As mentioned above, Guideline serves as investment manager, plan administrator and record-keeper. It acts as your ERISA 3(16) and 3(38) fiduciary. It also takes care of compliance, reporting and nondiscrimination testing.
\r\nAccount setup: The rep we spoke with told us that it takes just a few minutes to set up your account online, but after that, there's a 30-day waiting period that allows eligible employees to opt out of the plan. Guideline provides a training webinar for your employees.
\r\nPayroll integration: Guideline syncs with many payroll providers, including ADP, Gusto, Square Payroll, Paychex and QuickBooks Online. This allows the company to automatically process contributions and notifies it when you hire new employees so they can be added to your plan.
\r\nInvestment options: Plan participants can choose from Guideline's six managed portfolios or build their own investment portfolio, with options from more than 40 index funds from low-cost providers like Vanguard.
\r\nFund research tools: Plan participants fill out risk-tolerance questionnaires to help them find the best option for their situation. The company's website has a full, interactive menu of the mutual funds you can choose from if you prefer to build a custom portfolio.
\r\nAdvisory services: As the investment advisor for your plan, Guideline provides six managed portfolios that have a blended fund expense ratio of 0.06%. It doesn't charge any fees for this service.
\r\nReporting requirements: The IRS requires you to submit a 5500 form for 401(k) plans, and Guideline files it for you at no additional cost. This is only for contributions you made to your Guideline plan. If you had a previous plan, you'll need to work with its administrator for that portion of the filing.
\r\nLoans: A plan participant can take out a loan against their 401(k), but it cannot exceed 50% of the vested account balance. The minimum amount is $1,000, and the maximum is $50,000. There are fees for this service.
\r\nRollovers: Plan participants can roll over their old retirement savings accounts into their new Guideline 401(k) account. Roth IRAs can't roll over, but most other plans types can. These are some of the accepted account types:
\r\nWithdrawals: Plan participants with qualifying hardships may be eligible to make hardship withdrawals from their accounts.
\r\nGuideline's customer support is available by phone, email and chat from 6 a.m. to 5 p.m. Pacific time. When we called the company, posing as a small business owner looking for a retirement plan, our call was picked up promptly. The rep we spoke with was friendly and forthcoming with information about costs and how the plan works. He followed up with us by emailing a quote and links to key information on the website almost immediately after the call.
\r\nThe company's website has a searchable knowledgebase with extensive information on 401(k)s, with sections for employers, employees and advisors. It also has a blog with articles and company information.
\r\nGuideline lacks a mobile app, but the website is mobile-friendly, so plan participants can still check their dashboards from their phones or tablets.
\r\nEditor's note: Looking for the right employee retirement plan for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.
"},"pricing":{"isCapped":false,"isFeatured":false,"primary":true,"selected":"widget","widgetId":"10255","widget":{"id":"10255","cta":"Compare Quotes","isExclusive":false},"affiliate":{"cta":"Visit Site","link":"https://www.guideline.com/","name":""}},"thumbnail":{"path":"https://staging.business.com/images/rz/5cacf7c67b43747d108b456c/Guideline_logo.png"}}},{"bullets":["Free account setup","Lowest ETF expense ratios","Waivable annual fee"],"description":"Vanguard offers the best plan for self-employed people in the form of its individual 401(k). This plan is designed for self-employed people with no employees and allows you to maximize your retirement savings by contributing as both employee and employer. With your employee contributions, you can choose to make traditional pretax contributions or after-tax Roth contributions. We selected this plan for its affordability and low investment fees. Vanguard doesn't charge any setup fees to establish your account, and its annual account service fee is waivable when you have enough account assets – which shouldn't be a problem if you choose this type of retirement vehicle because of the higher amounts it allows you to save each year.\r\n\r\nFebruary 2020: In its newly published fund annual reports, Vanguard reported lower expense ratios for four of its ETFs and three of its mutual fund share classes. These changes returned $12.9 million in savings to investors, contributing to an overall client savings of $85.1 million in 2019. Over the 2019 fiscal year reporting cycle, Vanguard reported lower expense ratios on 16 out of 18 U.S. bond ETFs. The company says it \"expects greater fixed income ETF adoption to continue\" due to the \"scale of the global bond market and relative small footprint of bond ETFs.\"\r\n\r\nIn case you want to research mutual funds and index funds before you invest, Vanguard provides several tools on its website. You can search for funds by investment objective, monitor specific funds, view a fund's performance over time with historical charts and compare funds side by side. For further investment guidance, you can call the company to speak with a rep.\r\n\r\nMarch 2020: In response to market fluctuations resulting from the worldwide economic effects of the new coronavirus, Vanguard posted a video message from CEO Tim Buckley on its website. Reassuring investors that \"long-term growth prospects remain sound,\" he reiterated Vanguard's mantra to \"stay the course\" and encouraged investors to focus \"on the parts of investing you can control, such as diversification, balance, and cost.\" He noted that Vanguard's studies show that attempting to \"time the markets\" is a \"losing strategy\" that results in a 1.5% yearly loss versus riding it out.\r\n","descriptionTest":"","fullTitle":"Best Plan for Self-Employed Workers","isFeaturedBestPick":false,"isJumpLink":true,"tabTitle":"Best Plan for Self-Employed Workers","review":{"displayName":"Vanguard","canonical":"https://staging.business.com/reviews/vanguard/","id":"058e2a82df4bc900d010914163e419ae","url":"https://investor.vanguard.com/small-business-retirement-plans/self-employed","review":{"pros":["There is no setup fee, plus no sales loads or commissions on Vanguard ETFs and mutual funds; all you pay are fund expenses."," You can choose from more than 100 Vanguard mutual funds, which have some of the lowest expense ratios in the industry."],"cons":["There is an annual account service fee, but you may be able to have it waived, depending on the type of account, your account balance and other factors."],"fullReviewTest":"Vanguard's individual 401(k) is the best self-employed plan because there's no cost to set up an account, and the only investment fees you pay are fund expenses – there are no sales loads or commissions on Vanguard exchange-traded funds (ETFs) and mutual funds to eat into your savings. In fact, one thing you'll notice as you look into retirement plans is that a lot of other companies offer Vanguard funds as well because of these low fund expenses. The company does charge an annual account service fee, but it's waivable, depending on your account balance.
\r\nIn addition to individual 401(k) plans, Vanguard offers small business 401(k) plans, SEP and SIMPLE IRAs, as well as traditional and Roth IRAs. Vanguard has more than $5 trillion in investor assets under management and is the largest mutual funds provider in the world.
\r\nInvestment experts caution against paying too much in investment fees because they erode your returns, and even small percentages can impact potential long-term savings. Vanguard's low fund expense ratios make it a popular choice among investors, and Vanguard is our best pick for individual 401(k) plan providers.
\r\nIndividual 401(k) plans are best for self-employed people who want to save as much as possible in their retirement accounts, as you can contribute as both an employee and as an employer, and invest up to $56,000 per year (or up to $62,000 if you're age 50 or older). Like other 401(k) plans, you can save up to $19,000 as an employee, and you can choose between tax-deferred or Roth contributions. Then, as an employer, you can contribute up to 25 percent of your self-employment income.
\r\nHere's an overview of Vanguard's pricing for individual 401(k) plans.
\r\nBecause this type of retirement vehicle is intended for higher savings, we didn't deduct points for the account service fees, since they're waivable with an account balance of $50,000. The rep we spoke with suggested investing in a single fund – such as a target date fund – to minimize this fee until you're eligible to have it waived.
\r\nVanguard differs from many of its competitors in that it's an online brokerage – it doesn't have any physical offices where you meet with an in-person investment advisor. Instead, you set up your account and manage your investments online, which helps the company keep its costs low. It's also different in that it's not a publicly traded or privately owned company, rather it is owned by its investors. Here's more information on its features.
\r\nAccount setup: You can download the Individual 401(k) Employer Kit from Vanguard's website. It includes instructions and all the forms you need to set up your account, including a plan adoption agreement and basic plan document. If you have questions or need help filling out the forms, you can call the company for help. Once you enroll as a Vanguard client, it takes seven to 10 business days to set up an individual 401(k) plan.
\r\nInvestment choices: You can choose from more than 100 Vanguard mutual funds. Of these, 38 are index funds with Admiral Shares (a Vanguard share class that has a lower average expense ratio ranging from 0.04 to 0.45%, with an average of 0.11%).
\r\nFund research tools: Vanguard provides multiple tools to help you research funds before you invest in them. You can do side-by-side comparisons, view historical charts that track a fund's performance, search funds by your investment objective and create a watch list to monitor specific funds.
\r\nAdvisory services: You can call the company and speak with a representative who can offer you guidance on your investments, but this account type isn't available for Vanguard's personal advisory services.
\r\nReporting requirements: If your account reaches $250,000 or more in assets, you will be required to submit IRS Form 5500. The company will provide you with the information you need to complete this form.
\r\nLoans. No loans are available from this account.
\r\nRollovers. If you have an old 401(k) accounts from a previous employer, you can't roll it over into this account, but you can roll it over into a Vanguard IRA. If you call the company, a representative can help you set the IRA up and transfer your assets.
\r\nWithdrawals. Vanguard offers a free Required Minimum Distribution Service that calculates your RMD and can automatically deposit your money in your bank or transfer it to a nonretirement investment account.
\r\nMobile app. Available for Apple, Android and Kindle devices, you can use the Vanguard app to check your account balance and performance, analyze your portfolio, research funds, read financial news, and buy and sell funds. Once your account has been open for at least 60 days, you can also use the app with the camera on your phone or tablet to make mobile check investments.
\r\nIf you need help setting up an account, selecting investments or need to speak with an account representative, you can call Monday through Friday between 8:00 a.m. and 8:00 p.m. ET. You can also email the company for customer support. The company also offers a variety of searchable online help resources, including articles, FAQs, comparison charts, calculators and online lessons on financial topics such as getting the most out of your retirement plan, estate planning and saving for college.
\r\nWhen we called the company, posing as a small business owner, we spoke with a representative right away. The rep was patient and knowledgeable, asked about our situation and took the time to explain our options and the setup process. He disclosed fees and explained what they are, how to get them waived, and offered tips to minimize the fee until we qualified to have them waived.
\r\nIf you want to trade stocks and options rather than invest in ETFs and mutual funds, other brokerages have lower trading fees. As mentioned above, Vanguard doesn't have physical brokerage offices, so if you prefer to meet with a financial advisor in person, this isn't the best option for you. Lastly, Vanguard charges an annual account service fee, and you need to have $50,000 in your Vanguard accounts to have the annual maintenance fee waived for the individual 401(k) plan.
\r\n","fullReview":"
Vanguard's individual 401(k) is the best self-employed plan because there's no cost to set up an account, and the only investment fees you pay are fund expenses – there are no sales loads or commissions on Vanguard exchange-traded funds (ETFs) and mutual funds to eat into your savings. In fact, one thing you'll notice as you look into retirement plans is that a lot of other companies offer Vanguard funds as well because of these low fund expenses. The company does charge an annual account service fee, but it's waivable, depending on your account balance.
\r\nIndividual 401(k) plans are for small business owners with no employees. Visit our best picks page to see all of our recommendations for employee retirement plans.
\r\nIn addition to individual 401(k) plans, Vanguard offers small business 401(k) plans, SEP and SIMPLE IRAs, as well as traditional and Roth IRAs. Vanguard has more than $5 trillion in investor assets under management and is the largest mutual funds provider in the world.
\r\nInvestment experts caution against paying too much in investment fees because they erode your returns, and even small percentages can impact potential long-term savings. Vanguard's low fund expense ratios make it a popular choice among investors, and Vanguard is our best pick for individual 401(k) plan providers.
\r\nIndividual 401(k) plans are best for self-employed people who want to save as much as possible in their retirement accounts, as you can contribute as both an employee and as an employer, and invest up to $56,000 per year (or up to $62,000 if you're age 50 or older). Like other 401(k) plans, you can save up to $19,000 as an employee, and you can choose between tax-deferred or Roth contributions. Then, as an employer, you can contribute up to 25 percent of your self-employment income.
\r\nHere's an overview of Vanguard's pricing for individual 401(k) plans.
\r\nBecause this type of retirement vehicle is intended for higher savings, we didn't deduct points for the account service fees, since they're waivable with an account balance of $50,000. The rep we spoke with suggested investing in a single fund – such as a target date fund – to minimize this fee until you're eligible to have it waived.
\r\nVanguard differs from many of its competitors in that it's an online brokerage – it doesn't have any physical offices where you meet with an in-person investment advisor. Instead, you set up your account and manage your investments online, which helps the company keep its costs low. It's also different in that it's not a publicly traded or privately owned company, rather it is owned by its investors. Here's more information on its features.
\r\nAccount setup: You can download the Individual 401(k) Employer Kit from Vanguard's website. It includes instructions and all the forms you need to set up your account, including a plan adoption agreement and basic plan document. If you have questions or need help filling out the forms, you can call the company for help. Once you enroll as a Vanguard client, it takes seven to 10 business days to set up an individual 401(k) plan.
\r\nInvestment choices: You can choose from more than 100 Vanguard mutual funds. Of these, 38 are index funds with Admiral Shares (a Vanguard share class that has a lower average expense ratio ranging from 0.04 to 0.45%, with an average of 0.11%).
\r\nFund research tools: Vanguard provides multiple tools to help you research funds before you invest in them. You can do side-by-side comparisons, view historical charts that track a fund's performance, search funds by your investment objective and create a watch list to monitor specific funds.
\r\nAdvisory services: You can call the company and speak with a representative who can offer you guidance on your investments, but this account type isn't available for Vanguard's personal advisory services.
\r\nReporting requirements: If your account reaches $250,000 or more in assets, you will be required to submit IRS Form 5500. The company will provide you with the information you need to complete this form.
\r\nLoans. No loans are available from this account.
\r\nRollovers. If you have an old 401(k) accounts from a previous employer, you can't roll it over into this account, but you can roll it over into a Vanguard IRA. If you call the company, a representative can help you set the IRA up and transfer your assets.
\r\nWithdrawals. Vanguard offers a free Required Minimum Distribution Service that calculates your RMD and can automatically deposit your money in your bank or transfer it to a nonretirement investment account.
\r\nMobile app. Available for Apple, Android and Kindle devices, you can use the Vanguard app to check your account balance and performance, analyze your portfolio, research funds, read financial news, and buy and sell funds. Once your account has been open for at least 60 days, you can also use the app with the camera on your phone or tablet to make mobile check investments.
\r\nIf you need help setting up an account, selecting investments or need to speak with an account representative, you can call Monday through Friday between 8:00 a.m. and 8:00 p.m. ET. You can also email the company for customer support. The company also offers a variety of searchable online help resources, including articles, FAQs, comparison charts, calculators and online lessons on financial topics such as getting the most out of your retirement plan, estate planning and saving for college.
\r\nWhen we called the company, posing as a small business owner, we spoke with a representative right away. The rep was patient and knowledgeable, asked about our situation and took the time to explain our options and the setup process. He disclosed fees and explained what they are, how to get them waived, and offered tips to minimize the fee until we qualified to have them waived.
\r\nIf you want to trade stocks and options rather than invest in ETFs and mutual funds, other brokerages have lower trading fees. As mentioned above, Vanguard doesn't have physical brokerage offices, so if you prefer to meet with a financial advisor in person, this isn't the best option for you. Lastly, Vanguard charges an annual account service fee, and you need to have $50,000 in your Vanguard accounts to have the annual maintenance fee waived for the individual 401(k) plan.
\r\nEditor's note: Need an employee retirement plan for your business? Click the Compare Quotes button below to have our vendor partners reach out to you with information.
"},"pricing":{"isCapped":false,"isFeatured":false,"primary":true,"selected":"widget","widgetId":"10255","widget":{"id":"10255","cta":"Compare Quotes","isExclusive":false},"affiliate":{"cta":"Visit Site","link":"https://investor.vanguard.com/small-business-retirement-plans/self-employed","name":""}},"thumbnail":{"path":"https://staging.business.com/images/rz/5cace3d55a215eb14d8b4584/Vanguard-Logo.png"}}}]},{"__typename":"SectionWidget","id":"get-a-quote","isInToc":false,"type":"widget","title":"Find the Right Employee Retirement Service for Your Business","widget":{"widgetId":"10255"}},{"__typename":"SectionOurApproach","id":null,"isInToc":false,"type":"ourapproach","isActive":null,"ourapproach":{"isClonable":false,"servicesConsidered":"23","servicesTested":"10","servicesSelected":"4","linkText":"How we evaluate products and services","linkUrl":"mailto:editor@business.com"}},{"__typename":"SectionContainer","id":"compare-our-best-picks","isInToc":true,"type":"container","title":"Compare Our Best Picks","container":{"isBuyingGuide":false,"html":"| \r\n | Guideline | \r\nShareBuilder 401k | \r\nFidelity Investments | \r\nVanguard | \r\n
| 401(k) | \r\n\r\n Yes \r\n | \r\nYes | \r\n20+ employees | \r\nNo | \r\n
| Roth 401(k) | \r\nYes | \r\nYes | \r\n20+ employees | \r\nNo | \r\n
| Safe Harbor 401(k) | \r\nYes | \r\nYes | \r\nNo | \r\nNo | \r\n
| Solo 401(k) | \r\nNo | \r\nYes | \r\nYes | \r\nYes | \r\n
| SIMPLE IRA | \r\nNo | \r\nNo | \r\nYes | \r\nYes | \r\n
| SEP IRA | \r\nNo | \r\nNo | \r\nYes | \r\nYes | \r\n
When you're evaluating how much an employee retirement plan costs, there are two sets of pricing that you need to consider: your costs to sponsor the plan and your employees' costs to participate in it. These costs vary by the type of plan you offer and the provider. You should also look into which tax incentives are available to you and how they affect your overall cost.
\r\nAs mentioned above, the government offers tax incentives to small businesses that sponsor retirement plans for their employees. As you're calculating what it would cost to sponsor an employee retirement plan for your business, consult your accountant or tax advisor to find out which tax credits and deductions you're eligible for and how they would affect your tax strategy.
\r\nThis type of plan used to be rare for small employers to offer due to the costs and complexity of complying with federal regulations. You needed a plan administrator, custodian, record-keeper and financial advisor. Each of these parties charge fees; some are fixed, while others are based on plan assets. Some companies offer multiple services in-house but charge extra for some of them. Sound confusing? We think so too.
\r\nIn our opinion, hiring multiple companies to handle different tasks is burdensome and expensive, so in our search for the best retirement companies, we looked for all-inclusive 401(k) providers that cater to small businesses. They take care of administration, record-keeping, custodian and advisor duties, so you only need to work with one company. They also act as an ERISA 3(38) fiduciary, which lowers your liability risks. Some of these companies use \"robo advisors\" that use algorithms to manage assets, allowing them to forgo fund management or advisory fees, so you only pay the fund expense ratio. Most of these companies offer low-fee index funds and mutual funds to keep expense ratios down. Here's an overview of the fees you can expect to pay.
\r\nEmployer-sponsored IRAs are much simpler to set up and maintain than 401(k) plans, but they don't allow employees to set aside as much money in their workplace retirement plans. IRAs have a very different pricing structure from 401(k) plans, and there's a lot of variance between brokerages. Here's a sample of the fees you should look for when you set up this type of employee retirement plan.
\r\nIn our search for the companies with the best employee retirement plans, we knew we wanted to find providers that serve small business and offer quality plans that are affordable for both business owners and employees. We also wanted the plans to be easy to set up and manage. To this end, we looked for retirement services with the following features.
\r\nThere are several different types of 401(k) and IRA employee retirement plans that you can sponsor for your small business. Your accountant or tax advisor can help you decide which is the best option for your small business, based on your financial situation, number of employees and personal retirement goals.
\r\n401(k) plans: This is the most popular type of employee retirement plan because it has higher contribution limits for employees and offers a choice of pretax or Roth contributions. Plan varieties include traditional 401(k), safe harbor 401(k) and individual 401(k).
\r\nIRA plans: These plans usually have lower contribution limits than 401(k) plans but are also easier and less expensive to set up and maintain. Most brokerages offer both employer-sponsored IRAs and personal IRAs that can supplement workplace-sponsored retirement plans. Plan varieties include traditional and Roth IRAs, SIMPLE IRAs, and SEP IRAs.
\n"},{"title":"Which Plan Is Right for You?","html":"\nHere we've listed some factors that may help you quickly identify the type of retirement plans for small business that you want to learn more about. Before choosing a plan, be sure to consult your financial planner and tax advisor for advice specific to your business needs.
\r\nConsider the following plan types if you have employees and …
\r\nCheck out these plan types if you don't have employees and …
\r\nThis plan doesn't require employers to match employee contributions, but those who do are allowed to set a vesting schedule that encourages employees to stay with the company.
\r\nCosts: For this plan, charges often include a one-time setup fee, monthly or annual administrative and per-employee fees, and an investment or advisory fee.
\r\nPros:
\r\nCons:
\r\nContribution structure and matching requirements: This plan allows optional contributions from both employees and employers.
\r\nRules and deadlines: This plan can be established up to the last day of the initial plan year (usually Dec. 31). Typically, this type of plan is available to all employees age 21 and over who worked 1,000 hours or more in the last year. Participants can make withdrawals from this plan without penalty after age 59.5. Required minimum distributions (RMDs) begin the year the participant turns 70.5 years of age.
\r\nThe following retirement plan companies offer traditional and Roth 401(k) plans for small businesses: ADP, ShareBuilder 401k, Guideline, Human Interest, Paychex and Vanguard.
\r\nMany small business owners favor this type of plan because it allows them and their key employees to maximize their own retirement contributions.
\r\nCosts: This type of plan often has a setup fee, administrative fees, per-participant fees, and an investment or advisory fee.
\r\nPros:
\r\nCons:
\r\nContribution structure and matching requirements: Employers must match or contribute to employee accounts. Employees contributions are optional.
\r\nRules and deadlines: The establishment deadline for safe harbor 401(k) plans is Oct. 1. This plan is usually available to all employees, age 21 and older, who worked 1,000 hours or more in the last year. Participants may withdraw funds without penalty after age 59.5 but must begin withdrawing funds the year they turn 70.5 years of age to avoid being penalized with a 50% tax on the RMD.
\r\nThe following retirement plan companies offer safe harbor 401(k) plans for small businesses: ADP, ShareBuilder 401k, Guideline, Human Interest, Paychex and Vanguard.
\r\nThis type of plan, also called a solo 401(k) or i401(k), is best for high-earning, self-employed individuals with no employees (apart from a spouse) who want to invest as much as they can into their retirement plans. It allows a sole proprietor to contribute as both employee and employer.
\r\nCosts: The fees you pay for this type of plan vary by provider. Some have a setup fee, monthly or annual administrative fee, and an investment or advisory fee. Others don't charge a setup fee but have ETF and mutual fund expense ratios and charge for fund trades or have annual fund service fees (though these may be waived, depending on your account balance). Some also require a minimum opening deposit.
\r\nPros:
\r\nCons:
\r\nContribution structure and matching requirements: This plan allows self-employed individuals to make contributions as both the employee and the employer.
\r\nRules and deadlines: Individual 401(k) plans must be established by Dec. 31 or the end of the fiscal year. This plan type is only available to self-employed individuals with no employees (with the exception of a spouse who works for the business). As with nearly every retirement plan, you must be age 59.5 to withdraw funds without a tax penalty, and you must begin withdrawing funds at age 70.5 to avoid an expensive RMD tax penalty.
\r\nThe following retirement plan companies offer individual 401(k) plans for small businesses owners: ShareBuilder 401k, Fidelity and Vanguard.
\r\nThis plan type isn't a workplace-sponsored retirement plan. Rather, it's designed for individuals and can be used in addition to workplace-sponsored retirement plans.
\r\nCosts: Usually, there aren't any setup or administrative fees for the plan sponsor, but participants pay trading fees and fund expense ratios.
\r\nPros:
\r\nCons:
\r\nContribution limits: Whether you have a traditional or Roth IRA, the contribution limit for 2019 is $6,000. A catch-up contribution of $1,000 is allowed if you're age 50 or older.
\r\nRules and deadlines for traditional IRAs: Traditional IRAs can be opened at any time, but contributions for the year must be made by the due date for filing your tax return (typically April 15 without extensions). Individuals with earned income above $6,000, or $7,000 for those over age 50, can contribute to a traditional IRA. However, there is an age limit for this type of account – those who are age 70.5 by the end of the year may not open a traditional IRA. You can withdraw funds without penalty after age 59.5 and must begin withdrawing funds the year you turn 70.5 to avoid a 50% RMD excise tax.
\r\nRules and deadlines for Roth IRAs: Like traditional IRAs, Roth IRAs can be opened at any time, but annual contributions must be made by the tax filing deadline (April 15). There are some restrictions on the Roth IRA for high-income individuals, but there isn't an age limit. You must be age 59.5 to withdraw funds from your IRA without paying an additional 10% tax on investment earnings. Additionally, Roth IRAs must be held a minimum of five years before withdrawing funds. Unlike with most retirement accounts, you aren't required to withdraw funds as long as you live. After you die, your beneficiaries must begin withdrawing funds to avoid RMD fines.
\r\nThe following retirement plan companies offer traditional and Roth IRAs to individuals: Fidelity and Vanguard.
\r\nA Savings Incentive Match Plan for Employees, also known as a SIMPLE IRA, can be set up by self-employed individuals and small business owners with 100 or fewer employees.
\r\nCosts: This plan usually has no setup fee and few administrative costs (some may be waivable). Participants pay trading fees and fund expense ratios. Optional advisor services may be available for an extra fee.
\r\nPros:
\r\nCons:
\r\nContribution structure and matching requirements: Employers are required to match or contribute to employee accounts. Employee contributions are optional.
\r\nRules and deadlines: SIMPLE IRAs must be established by Oct. 1. All employees whom you've paid at least $5,000 during previous years, or expect to pay this year, are eligible to participate in this type of plan. Plan participants may begin withdrawing funds at age 59.5 without paying a 10% additional tax. However, participants must hold the account for at least two years before making withdrawals to avoid a higher 25% additional tax. Participants must begin withdrawals the year they turn 70.5 to avoid a 50% RMD excise tax.
\r\nThe following retirement plan companies offer SIMPLE IRA plans for small businesses: ADP, Fidelity and Vanguard.
\r\nSimplified Employee Pension Plans, commonly referred to as SEP IRAs, can be set up by self-employed individuals as well as business owners with employees.
\r\nCosts: There often isn't a setup fee for this plan. There may be administrative or service fees, though they may be waivable. Participants pay trading fees and fund expense ratios. Optional advisor services may be available for an extra fee.
\r\nPros:
\r\nCons:
\r\nContribution structure and matching requirements: Employers can choose which years they contribute to employee accounts. Employees' retirement contributions are not permitted.
\r\nRules and deadlines: Although SEP IRAs are often thought of as a retirement plan option for small businesses, there's no limit on the size of business that can offer them. SEP IRAs must be established by your business's tax filing deadline (usually April 15, unless you've filed an extension). All employees who are age 21 or older, have worked for you for at least three out of the last five years, and have earned at least $600 during the year are eligible to participate in this plan. Participants may withdraw funds without penalty after age 59.5 but must begin withdrawals the year they turn 70.5 to avoid a hefty RMD tax.
\r\nThe following retirement plan companies offer SEP IRA plans for small businesses: ADP, Fidelity and Vanguard.
\r\nThe information presented in this article is general and is not financial, legal or tax advice. You should consult your CPA, financial advisor, or tax attorney for investment and retirement plan advice specific to your business and personal situation.
\n"},{"title":"Retirement Plan FAQs","html":"\nSponsoring a retirement plan for your employees is a big step for a small business. Here are four factors to consider that can help you determine whether offering a retirement plan is strategically a good fit for your business.
\r\n1. It helps you attract and retain talent. As the country enjoys low unemployment rates and skilled workers are in high demand, offering a retirement plan as part of your benefits package helps you compete against larger companies to attract and keep top talent.
\r\n2. It gives you tax advantages. If you haven't offered a retirement plan before and have fewer than 100 employees, you may be eligible for the Retirement Plans Startup Costs Tax Credit. For the first three years of your plan, you're credited up to 50 percent of plan startup and administration costs, up to $500 per year. If you choose to match contributions, they're tax deductible. You may also be able to lower your personal income tax bracket by participating in the plan. You should consult your CPA or tax advisor to get information about the tax implications for your specific business as well as your personal finances.
\r\nUpcoming federal legislation may offer additional tax credits to small businesses that automatically enroll their employees in a retirement plan. It may ease other regulations as well, making it easier for small business owners to offer this benefit to their employees.
\r\n3. It helps you save for your own retirement. You're allowed to participate in the plan you sponsor, and you'll be able to save more money for retirement than if you set up a traditional or Roth IRA. Many small business owners choose the safe harbor 401(k) because it allows them to max out their own retirement contributions when they match or contribute to employee accounts. Again, you should speak with your CPA or financial advisor to find out how you can maximize your retirement savings under the plan you select for your business.
\r\n4. Your state may (soon) require it. Some states have passed, or are in the process of passing, legislation that requires businesses to either provide retirement plans for their employees or register with the state and allow employees to participate in a state-sponsored plan. Employers choosing the latter would be required to submit employee payroll contributions to the state, but as of this writing, they wouldn't be required (or allowed) to contribute to employee plans. They would, however, face penalties for noncompliance. They also wouldn't receive the tax credits for sponsoring a plan of their own.
\r\nCalifornia, Illinois and Oregon have already begun implementing such legislation in phases, starting with larger businesses. Small businesses will also be subject to this legislation. For example, California will require compliance from businesses with just five or more employees by June 2022.
\r\nConnecticut, Maryland and Massachusetts have passed legislation to form state-run plans. New Jersey and Washington plan to offer online marketplaces where small business owners can shop for retirement plans for their businesses.
\r\nCosts vary, depending on how many employees will be participating in the plan, the type of plan you choose, and the retirement plan company (or companies) that you work with to help you run the plan. You should also consider whether or not you will match or contribute to employee IRA or 401(k) accounts.
\r\nFor 2019, employees can contribute up to $19,000. Employees age 50 and older can make an additional $6,000 catch-up contribution. Contribution limits for employers cannot exceed 25% of the employee's compensation. However, the overall limit for a defined contribution plan that includes both employee-elected deferrals and employer contributions.
\r\nAs in years past, we'll see an increase in maximum contributions to retirements accounts. Here's a sampling of 2020's contribution caps for retirement plans:
\r\nThe biggest news in employee retirement plans for 2020 is the anticipated passage of the SECURE Act (Setting Every Community Up for Retirement Enhancement). Passed by the House earlier this summer, the bill has finally been sent to the Senate as part of a federal spending bill, where it is expected to be passed and sent on to the White House to be signed into law. It is expected to go into effect Jan. 1, 2020. Here are some of the changes to retirement plans that the bill includes:
\r\nMay 2020: To help plan sponsors and beneficiaries affected by the coronavirus outbreak, the U.S. Department of Labor's Employee Benefits Security Administration has issued guidance on the EBSA Disaster Relief Notice 2020-01 that extends certain ERISA deadlines, such as for benefit statements and annual funding notices, so long as the plan administrator \"makes a good faith effort to furnish the documents as soon as administratively practical.\" It also has guidance on temporarily relaxed loan and distribution rules – including rules for loan verification in accordance with the CARES Act – and offers relief from DOL enforcement action, \"provided that plan fiduciaries act prudently and in the best interest of plan participants.\"
\r\nJune 2020: In an informational letter, the U.S. Department of Labor stated that a 401(k) plan's fiduciaries may offer \"a professionally managed asset allocation fund with a private equity component as a designated investment alternative for a participant directed individual account plan.\" It's important to point out that this doesn't mean that plan participants can directly invest in private equity investments – rather, a private equity investment may be a component of a \"professionally managed asset allocation fund\" – such as a target-date fund.
\r\nPrivate equity investment options were already allowed in defined benefit plans (i.e., pensions), but were not allowed in defined contribution plans like 401(k)s. A November 2019 study from the Defined Contribution Alternatives Association and the Institute for Private Capital suggested that allowing this type of investment to be included as part of a professionally managed asset allocation fund would have \"diversification benefits that lower overall portfolio risk.\"
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