Paychex 401k

[cdoherty]

I set up a 401k retirement program for my employees and myself through Paychex. Right now all of the investing is with Fidelity and each one I discovered has a 3.5% load. Now I am just learning as I go along but I feel a bit of a fool because when the guy signed me up for the 401k he said now we use Fidelity and I just went along with it. I seem to be a trusting sort of person!! I have read more of their info and they get a take off all the investments with Fidelity. My other options are a Guided Fund Select (which would cost more money) Or an Open Fund with over 3000 funds including many Vanguard Funds, Merrill Connect with a list of funds, or Morgan Stanley Smith Barney with a larger list of funds.
I am inclined to move to the open fund but I can only pick 60 funds.
I am thinking Vanguard Funds, Pimco, Janus, JP Morgan,, T Rowe Price. I intend to research those and then make my choices.
As I said I am learning as I go along and I would really appreciate your thoughts and ideas. Choosing 60 may be too confusing as the employees are also beginners. Thank you

[fcirullo]

Now I am just learning as I go along but I feel a bit of a fool because when the guy signed me up for the 401k he said now we use Fidelity and I just went along with it. I seem to be a trusting sort of person!

The mistake that you made is common. It's common because there are as many ideas on how a plan should be set up as there are employers, employees, and trusted advisers.

Be that as it may, it's like this: There are five steps that every employer must complete when setting up, managing, and monitoring a 401(k) or 403(b) plan. The mistake that you made is you completed step three (you hired a vendor) before you completed steps one and two.

Complete steps one and two right now, and you can fix your plan fast. You can learn how to complete all five steps in the right order at: http://www.bogleheads.org/wiki/Setting_up_a_401k_plan

You can do this! Don't worry, the information is FREE.

Edited twice on 06/15/2011 to correct two typographical errors.

[surveyor]

Don't feel bad - we did the same thing for our small company about 5 years ago. We didn't have any load fees but the expense ratio approached 2% for the managed funds. We only had about 14 choices too.

We've since sold/merged the company and deal with a different animal (John Hancock), which is similar.

Looking back, in our circumstance we should have just setup an employer SIMPLE IRA plan. The downside is that there is more responsibility for the employer versus a vender plan. Another downside is that there isn't much investing guidance. The upside is that cost and fees are greatly reduced for employee and employer. IIRC these can be setup through Vanguard.

Another option that we were looking at, but hadn't pursued at all, was contacting Employee Fudiciary to manage a new 401k. They received good reviews from what I could find and would manage a smaller 401k. Again, the tradeoff is that there isn't much investing advice, but I will say that we didn't get one lick of investing advice through Paychex/Fidelity. Also, getting simple plan questions answered after the 401k sale and setup proved to be elusive. There wasn't much value for the fees.

[fcirullo]

I set up a 401k retirement program for my employees and myself through Paychex.

Can you fire your adviser so that you are not having to pay for advice and still use ePlan, which is owned by Paychex, Inc?

If so and if you have read steps one and two in the article Setting up a 401k plan , you can save time by going to the ePlan Services Web site at https://secure.eplanservices401k.com/erStart/step3.jsp .

Next, make a list of all of the Vanguard and Fidelity funds that are in the ePlan universe of funds.

Next, show us your list of funds and include the name of the each fund, its symbol, and its expense ratio.

That way some of the folks here can help you select a menu of index funds for your plan.

Note: On May 3, 2011, Paychex, Inc. (NASDAQ:PAYX) announced that it has completed the acquisition of ePlan Services, Inc., a provider of recordkeeping and administrative solutions to the defined contribution marketplace.

Please let us know what the total cost of your plan will be. Okay?

Edited on 06/18/2011 to fix a link.

[synergy]

Please go to this website before you begin to make changes:

http://www.403bwise.com/

I administer our non-profit plan and this website is useful for all stakeholders in 403 b plans. Understand all the regs that apply before you make your next move. There is a great deal of info to help you to set up a good plan that is in compliance.

I like the Paychex payroll module and their HR module has some interesting aspects for a larger company. As you have learned, their expertise in investment plans is dubious. I do not send them the cash for our 403 b plan, they just note the amount that I set up as recurring deduction and I send the employer/employee contributions directly to Vanguard from our checking account. This allows the greatest flexibility with the least paperwork.

The regs for 403s and 401s have become practically identical so the info is mostly the same. A reliable vendor can guide you through the steps.

[fcirullo]

I administer our non-profit plan and this website is useful for all stakeholders in 403 b plans.

403(b)wise has great information on 403(b) plans. And it's important for a fiduciary of either a 401(k) or 403(b) plan to understand and comply with the laws, rules, and regulations.

cdoherty has a 401(k) plan that can be improved with low cost recordkeeping and administration plus access to a universe of low cost index funds such as those offered by Vanguard or Fidelity.

By reducing costs whenever possible and using a menu of low cost index funds it helps you to manage your fiduciary liability. By the way, there are a number of low cost Third Party Administrators that cdoherty can switch the 401(k) plan to and save money if it turns out that ePlan is more expensive.

It would be instructive if you would tell us more about your 403(b) plan.
1. Which Vanguard funds does your plan have access to, and what are the costs that are involved?
2. You are the administrator for the plan, but how much does Paychex charge your plan each year?
3. What else do we need to know about the new 403(b) plan requlations, newly required recordkeeping, and total costs for your plan and its investments?

[synergy]

It would be instructive if you would tell us more about your 403(b) plan.
1. Which Vanguard funds does your plan have access to, and what are the costs that are involved?
2. You are the administrator for the plan, but how much does Paychex charge your plan each year?
3. What else do we need to know about the new 403(b) plan requlations, newly required recordkeeping, and total costs for your plan and its investments?

If these questions are directed to me, the answers are:

1. Our plan was established directly with Vanguard and so we access to all Vanguard funds.
2. Paychex only records the deductions and matches as part of their recordkeeping for handling payroll thus there is no additional cost.
3. 403s are now governed by the same regs as 401s. The regs went into effect in Jan of 2010, I believe. The major additional requirements are that yearly reporting to the Feds is mandatory, all participants must receive full disclosure statements about the plan, we are required to have a bond equal to the amount of cash held in the plan. We hire a third party firm to do all of our reporting and it costs about $2500 a year for 20 employees. Vanguard only charges their regular ERs and minimum fund fees.

[Paychex]

All investment options available through Paychex Retirement Services are either "no load" or "load waived". Detailed fee information, including waivers for retirement plans where applicable, can be found in each mutual fund's prospectus. We also have licensed representatives on staff to discuss the fees for any of the available investment options.

The design of each of our product options is meant to provide America's businesses with many choices which are flexible enough to allow them to meet their company’s retirement objectives. We offer a complete suite of products that range from Custodial and Trustee Services to Co-Fiduciary, where employers can reduce risk while providing a quality product for their employees.

Paychex specializes in retirement plan recordkeeping and plan administration. Our many available investment options allow our clients and their advisors to choose the necessary investments based on their ideal criteria. Paychex operates from a revenue neutral perspective.

We are very open about the fees we receive for our services. In fact, we are already compliant with the fee disclosure rules that go into effect in April 2012.

Also, if you would like, we are more than willing to personally discuss your plan and the product options available. Please feel free to private message us to discuss at your convenience.

[fcirullo]

We are very open about the fees we receive for our services. In fact, we are already compliant with the fee disclosure rules that go into effect in April 2012.

Would you mind showing us how much you charge for recordkeeping and administration per eligible employee? Are there other costs that we need to know about?

Also, how much would employees pay for a core menu of funds?
1. large-cap index fund
2. mid-cap index fund
3. small-cap index fund
4. foreign index fund
5. money market mutual fund
6. short-term bond fund
7. intermediate-term bond fund
8. long-term bond fund

Where can we see which index funds are available?

[robbyforsythe]

Crickets...