Who Is the Best 401(k) Provider?

September 16, 2020

Regardless of whether your business is large or small, offering a 401(k) can be a great way to show your employees that they are valued and that you care about their future. Offering a 401(k) also helps attract top talent to your company. But with so many options out there, picking the right 401(k) provider can be daunting. That's why we've compiled a list of the top 401(k) providers out there. Let's take a look.

Fidelity Investment

Fidelity is a trusted 401(k) provider with over 30 years and experience and a whopping 30 million plan participants. Fidelity offers 401(k) plans to businesses of all sizes but says that 86% of its clients have less than 500 employees. 

Here are some of the advantages of choosing Fidelity:

  • Diverse investment options - 16,000 mutual funds from 380 fund companies.

  • Employees have the option of transferring old retirement accounts into their new 401(k).

  • A mobile app so employees can monitor individual accounts.

  • Integration with payroll services.

Merrill Edge

Merrill Edge offers a Merrill Small Business 401(k) plan geared towards small businesses. They list streamlining, affordability, and convenience as the main advantages of choosing this plan. 

Here are some of the advantages of choosing Merrill Edge:

  • Affordability - They have an annual asset-based fee of 0.52% which is lower than many of their competitors.

  • Transparent pricing - They have a one-time setup fee of $390, a monthly admin fee of $90, and a $4 recordkeeping fee.

  • Automatic enrollment options and a Roth 401(k) option.

  • Employees can convert their existing 401(k) into the Merrill Small Business 401(k).

Charles Schwab

Charles Schwab is one of the most popular and well-established retirement firms out there, and with good reason. They have built a reputation for offering solid and diverse 401(k) plans to businesses of all sizes. 

Here are some of the advantages of choosing Charles Schwab:

  • They offer a range of plans including Index Advantage 401(k) plans and ETFs. These funds have low operating expenses compared to actively managed mutual funds.

  • Automatic enrollment.

  • No annual fees.

  • They provide ongoing account monitoring with automatic adjustments.

  • Self-employed people can get an Individual 401(k) plan.

Employee Fiduciary

Employee Fiduciary is a great option for small businesses due to their low fees. CBS Moneywatch rated them as the Best Small Company 401(k) provider. Employee Fiduciary isn't afraid of being compared to the big providers, in fact, they encourage it. They recommend that employers compare Employee Fiduciary plans against their current provider, claiming they offer the same investment choices, but lower fees. 

Here are some of the advantages of choosing Employee Fiduciary:

  • Low fees - It costs only $500 to start a new plan, and $1000 to convert an old plan. Small employers only pay $1,500 a year for up to 30 employees.

  • Access to 377 mutual funds.

  • All the benefits that come with more expensive providers including annual report summaries, benefit statements, and tax return forms.

Vanguard

Vanguard is one of the largest mutual fund companies globally, and despite working with large companies, also offers low cost 401(k) investment options for small businesses. However, it's important to note that Vanguard doesn't do payroll, plan administration, or other HR activities.

Here are some of the advantages of choosing Vanguard:

  • With over 100 mutual funds, including some of the most competitively priced in the industry, there's something for everyone.

  • Diversified and low-cost ETFs as well as date funds.

  • Easy integration with 401(k) administrators.

Rahul Iyer