Best 401k Companies for Your Business
Your business needs to provide employees with a retirement plan, period. It must come from nothing less than one of the best 401k companies.
The last thing your employees want to think about in their golden years is waking up at the crack of dawn for work.
Your business needs to provide employees with a retirement plan, period. It must come from nothing less than one of the best 401k companies.
We all hit a certain age when we would rather spend time in a sunny location, tackling new hobbies. Everyone ultimately wants to break free from their cubicles and office desks.
There comes a time when work is no longer on the brain, and making plans for retirement takes over.
Owners recognize that retirement plans are not as straightforward as they used to be.
Once upon a time, employees could count on pension plans and social security. They were confident that they would cover retirement costs. Today, these investment options are scarce.
Small business owners need to help employees prepare for their retirement. Offer workers various methods on how to begin retirement planning today.
Your business must embrace and adopt using one of the top 401k companies.
If you do, you will soon find out that it is not only employees who reap the rewards from a 401k.
How Companies Benefit from Offering 401k Plans
Every employee benefits from having a 401k plan. Besides not having to work, they do not have to wake up to a blaring alarm clock.
There comes a time when retirement savings should kick in to ensure they have a regular income.
A well-executed retirement plan will take care of it.
But do business owners also receive benefits from offering employees 401k plans?
Simply put, yes, they do.
Although your business does not have to set up a 401k, as an owner, you should consider it.
If you look at a 401k plan as a multi-purpose tool for business owners, you might end up changing your mind.
401k Business Owner Benefits
Not only do 401k plans help employees retire, but they offer many benefits to business owners as well.
Offer features like profit sharing and employer match. These can jump-start your employees’ savings and create an incentive. Happier workers and employee satisfaction will grow at your company.
Stay competitive and attract skilled employees, which every business requires for success.
Lower your taxable income
Business owners do not want to miss out on reducing their taxable income. Employers need a 401k plan that can maximize contributing funds.
Owners can offer standard or matching contributions to all who meet the 401k plan terms.
Businesses with 100 employees or fewer can receive a tax credit.
Grow your retirement savings
Employers can also use the company's 401k plan. Preparing for your retirement is also important.
Employees are looking for ways to further their careers. Better retirement benefits might be the ultimate differentiator. With an excellent 401k plan, you can keep your employees close and loyal.
Business owners can choose from a list of retirement plans. Pick the one that best suits your company and employee needs.
Different 401k and IRA Retirement Plans
A 401k is a retirement savings plan sponsored by an employer (you). Employees invest part of their paychecks into an account before the removal of taxes.
Employees do not have to pay taxes until they withdraw money from the retirement account. If it occurs before the employee retires, it may cause penalty fees to occur.
401k and IRA Plans Are Not The Same.
- A 401k is a type of employer pension plan.
- An IRA is an individual retirement account.
- 401(k) contribution limits are higher than those for IRAs.
Yet both plans have the same goal - to provide income during retirement.
Let’s take a closer look at the different types of 401k plans and IRA's available.
Traditional 401k plans
For the year you make deductible contributions, you lower your taxes. Deductions involve several factors, including,
- Filing status,
- Whether you (or your spouse) have a workplace retirement plan.
It is a pre-tax savings account. It requires yearly withdrawals starting at age 70.
Roth 401k Plan
Roth 401k is an employer-sponsored investment savings account and an after-tax account. It is well-suited for those who expect to be in a higher tax bracket while in retirement. Withdrawals are tax-free.
Safe Harbor 401k Plan
It has a "company match" and allows employees to avoid most annual compliance tests. Employers make yearly contributions to employees 401k plans that have Safe Harbor conditions.
Vesting of those contributions happens immediately.
Solo 401k Plan
If you do not have employees, except for spouses, there is a retirement plan for you. This plan is Solo 401k or Self-/Individual 401k.
SEP 401k Plan
The Simplified Employee Pension Plan (SEP) offers high contribution limits. Business owners can save more for retirement with a SEP 401k plan than with a traditional 401k.
- They do not need record-keeping or a third-party administrator.
- They need some administrative upkeep.
- The SEP 401k plan does not require an IRS Form 5500. There is no compliance testing, and no payroll deductions, either.
- Only owners can contribute funds to SEP plans. Employees cannot add any of their own money to the program.
- If the owner has a SEP 401k plan, they must make equal contributions to their employees' accounts.
Example: If an owner puts 20% of their paycheck into their SEP 401k, they must do the same for employees' accounts.
If your business has many employees, this plan can become expensive. If you have a small business with only a few employees or are a freelancer, the SEP 401k plan is an excellent option.
If self-employed, you can have a SEP-IRA plan. You can also contribute to the 401k plan you have at another company. You can reduce your contributions and your earnings grow, tax-deferred. You will pay taxes on withdrawals from the SEP-IRA.
SIMPLE IRA 401(k) Plan
The Savings Incentive Match Plan for Employees (SIMPLE IRA) is easy to set up. It is a low-cost retirement plan that does not require IRS reporting or record-keeping.
- A SIMPLE IRA allows employees to save money, making it cheaper for business owners than a SEP-IRA plan.
- Owners who want to maximize contributions are better off choosing a different plan.
- The company must match 3% of an employee’s salary or a 2% non-elective contribution.
Example: If an employee is saving 3%, they will receive an extra 3% from their employer. But if the employee chooses not to save, they will still receive a 2% contribution from their employer. There is a limit to contributions.
With a Roth IRA plan, distributions in retirement do not have taxes. It offers more lenient rules for early withdrawals than some other IRA plans.
Eligibility depends on income. It only offers tax savings if your tax rate is higher in retirement.
Current laws allow you to have both a Roth 401k and a Roth IRA. Your income cannot exceed the limits of a Roth IRA contribution.
Spousal IRA (Traditional or Roth)
The IRA plan allows non-working spouses to collect tax-advantaged retirement savings. They have the same contribution and deductibility limits as the working spouse. The couple must file a joint tax return to be eligible for this plan.
Rollover IRA (aka Conduit IRA)
Rollover IRA involves rolling over money from a past employer’s 401(k) into an IRA account. It will have a different tax treatment.
Example: If you are rolling over money from a 401k into a Roth IRA, it counts as a conversion. It puts income tax on original contributions.
You must follow the 60-day rule when completing a 401k rollover to avoid penalties and taxes.
Financial employee contributions and employer contributions are both critical in increasing investment funds. But your responsibilities will vary depending on the plan you choose.
Offer workers a 401k company with retirement plan administrators and financial advisors. They can help make retirement a reality.
As workers age, they hope their many years of hard work and loyalty will pay off. They want their future to be full of workless days and abundant relaxation.
Provide employees with retirement plans to help them reach retirement goals.
What to Look For In a Business 401k Plan
Now that you know a bit more about the different types of 401k and IRA plans, plus their benefits, it is time to set one up.
To start, let’s look at some criteria to use when examining them.
What to look for in a 401K Plan:
- Cost - Consider both employer and employee pricing
- Ease-of-use - Automated compliance, etc.
- Plan Design: Specific features and setup of your small business retirement plan.
- Plan Type: Is the plan a Safe Harbor 401k or Traditional 401k, etc.?
- Eligibility: When employees qualify to join the 401k plan and make salary deferrals.
- Enrollment Timing: When eligible employees can enroll in the 401k plan
- Flexibility - Investment options and vesting schedule.
- Restrictions and limitations - Contribution amounts, penalties, etc.
- Roth: Does your plan allow Roth contributions?
- Employer Contributions: Does your plan offer employer contributions, like matching contributions or profit-sharing?
- Vesting: When employees gain ownership over employer contributions (this is a vesting schedule)
- IRS Compliant - High participation and savings rates.
There are five steps to setting up a retirement plan.
Steps to set up a 401k Plan:
- Decide who is establishing and maintaining the plan (401k companies, plan sponsors)
- Create a written employee benefit plan document
- Arrange a trust for the plan assets
- Come up with a record-keeping system
- Distribute plan information to eligible plan participants (Owner, employees)
Before you can set up a 401k company in your business, you must first choose one.
What Is the Best 401k Company For Your Business?
Research each potential 401k plan before offering it to employees. As it can play a significant role in attracting workers and retaining them, choose wisely.
Best 401k Companies for Businesses
To help with your search for 401k plans, we have put together a list of only the best ones for businesses.
Starting Price: Contact for pricing.
Automatic Data Processing Inc. (ADP) offers many 401(k) plan types.
They include Roth 401k, Safe harbor 401k, SIMPLE IRA, and SEP IRA plans. Employees with existing 401k accounts can transfer those plans into the new policy.
Associates are eligible to contribute to the Plan on the first day of employment. Regular full-time and part-time associates can add up to 50% of their paychecks.
ADP matches $.50 on the dollar for up to 6% of pay. It offers a mobile app. Employees can check their retirement accounts from their smartphones, etc.
The company is the plan's administrator and record-keeper. It provides documents, conducts nondiscrimination testing, and prepares IRS Form 5500.
If your business already uses ADP’s payroll services, consider their 401k plan. They integrate seamlessly.
Starting Price: Estimated plan pricing with the ForUsAll 401(k) Fee Calculator.
ForUsAll sync your record-keeper and payroll, so your 401(k) takes care of itself. Your business can offer employees low fees and index funds.
Employees get a mobile interface and a virtual advisor.
The team at ForUsAll handles day-to-day responsibilities, contributions, and employee communication and on-boarding.
Be free of compliance risk with their full administrative and investment fiduciary protection. The company carries a $5M professional liability insurance policy for ERISA fiduciary services.
ForUsAll Plan Administrators will review, sign, and submit your form 5500.
Starting Price: $8/employee plus a $39 base each month. It does not charge employee investment fees. Zero investment management fee. Zero custodial fees.
Guideline offers an all-inclusive 401(k) and full-stack solution. Participants can choose from over 40 low-cost mutual investment options, including providers like Vanguard and others.
The company automates Plan administration, offers compliance testing, and Safe Harbor retirement plans.
Guideline prepares yearly reports at no extra cost/ annual fees. They work on form 5500 and 1099-R.
There is a termination fee of $250 if you cancel the plan early.
Starting Price: Contact a financial advisor to discuss specific plan prices.
American Funds offers over 360,000 retirement plans.
It provides tailored 401k account options. Programs include both traditional and Roth versions.
SIMPLE IRAs, SEPs and Rollover plans are also available.
Its retirement plans work with any business, includes startups, recently merged companies, or gained ones.
Employees can determine how much money it automatically adds to the 401k plan from each paycheck. Investment choices can be goal-focused (preservation, balance, and growth) or individual mutual funds.
Some employers match employee contributions dollar-for-dollar. Others contribute a percentage of what employees contribute.
Employees own 100% of their salary-deferral contributions. With employer contributions, participants often become vested.
American Funds provides tools that help with retirement planning, like an investment calculator.
Starting Price: Plan costs $120 per month plus $4 per eligible employee, with a $499 setup fee.
Human Interest is an affordable, full-service 401k plan for employees.
The company provides compliance testing, record-keeping, paperwork—even automating syncs with your payroll.
Employees pay 0.50% of the account balance per year + 0.07% average fund fees.
Low - cost, high-service 401k providers.
Human Interest offers savings plans that cost less than some single health care insurance plans.
Starting Price: Request a quote.
- Rowe Price helps employees meet long-term financial goals.
Some investment solutions check target-date funds and performance.
You can invest in 401k, Roth IRA, Rollover IRA, and Traditional IRA plans.
The company also provides workplace retirement plans that are mobile-friendly. Check market status through the tools T. Rowe Price offers to ensure retirement is on target.
Starting Price: Contact for personal finance plan pricing.
Betterment for Business allows employees to create their retirement plans. They help your workers get on the right path.
They consider what employees want to retire and their expected social security income.
Receive dedicated support with 401k plans. Gain access to straightforward tools that help with retirement readiness.
Starting Price: $75/month
Ubiquity helps businesses gain from Safe Harbor, 401k Match, Roth, and pretax contributions. They offer automatic enrollment for employees.
Workers can maximize their savings as Ubiquity. It protects up to $56,000/year with 401k contributions vs. $6,500 with an IRA.
You also save with this retirement plan company’s flat-fee pricing.
Starting Price: $1,500 + Custody Fee 0.08% of plan assets.
Employee Fiduciary lets employees keep more of their hard-earned money. Their low 401k plan fees offer better savings.
You can choose any mutual fund or ETF you want, like index funds from Vanguard and Fidelity investments.
If your business wants to invest in a 401k company, careful attention is essential. Make sure you review financing objectives, risks, and expense ratios.
Investors should read the fine print of their retirement plans to locate any hidden fees. Grasp a full understanding of what each project entails.
Do not stop your search until you find the best 401k companies for your business.
Invest in the best retirement plans for your employees. It will encourage them to invest even more effort into the work they do for your business. You are creating winning solutions for everyone.