Bogleheads

[leonard]

I have an opportunity to set up a new 401k plan at work. I recall past posts where others on the forum have done the same. So, I seek the advice of folks on this forum.

1. Which 401k providers should be on the short list for a small company 401k? For cost? For functionality?
2. Proposed Fund List, all Vanguard - Feedback?

1..Target Retirement Funds.

Core Portfolio Funds
2.. Total Stock Market Index
3.. Total International Stock Market Index
4.. REIT Index
5.. Total Bond Market Index.

Slice & Dice Portfolio Funds
6.. 500 S&P Index.
7.. Large Value Index
8.. *Mid Cap Index
9.. *Mid Cap Value Index
10.. Small Cap Index
11.. Small Cap Value Index
12.. Developed Market Index
13.. Emerging Market Index
14.. *International Value
15.. *International Explorer (if available in 401k)
16.. Short Term Bond Index
17.. Inflation Protected Securities Fund
18.. Prime Money Market

3. What are the main issues you encountered implementing? or changing providers?
4. Other issues to consider?

As always, I appreciate the feedback of folks on this board.

[edge]

The abundance of choices may be overabundance for some plan members. Make sure that they are educated enough to know that if they don't want to be educated about investments they should just chose a TR fund and forget about it.

[tfb]

There are two good providers for small company 401k plans:

1. JF Actuarial and
2. web401k

The two companies were related in the past so they work in similar way. They offer Vanguard funds as pure fee for service. When I worked with them a while back, the fee was like $2,000 + $40 per account per year, plus a one-time setup fee. And that included everything from Internet access and quarterly statements to year end testing and signature ready Form 5500.

The fund lineup I chose for my former employer:

1. Vanguard LifeStrat Con Growth
2. Vanguard LifeStrat Mod Growth
3. Vanguard LifeStrat Growth

These 3 funds were chosen for people who want an all-in-one portfolio. I chose LifeStrategy funds because they have full 10 year history. Target Retirement funds don't. The full 10 year history really helps our employees look at what the portfolio would perform under different market conditions. If you like TR funds, that's fine too.

4. Vanguard Total Bond Mkt Index
5. Vanguard Total Stock Index
6. Dreyfus Int'l Stock Index

These 3 funds were provided for constructing a custom portfolio using broad indexes. Dreyfus fund was chosen because at that time Vanguard didn't allow new 401k money into their international funds due to market timing. Their policy may have changed now.

7. Vanguard Prime Money Market
8. Vanguard Short-Term Corp
9. Vanguard Infl-Protected Secs
10. Vanguard Value Index
11. Vanguard 500 Index
12. Vanguard Small Cap Value Idx
13. Vanguard Small Cap Index
14. Vanguard REIT Index

This final batch were provided for building a slice and dice portfolio. Using these together with Total Bond and Int'l Index fund, I think the plan can pretty much accommodate every reasonable fancy. We were allowed 15 funds. I left one unused. Everybody was happy when we made the change because I have provided something for everybody.
_________________
The Finance Buff

[Laura]

Leonard,

I think your list looks great. I hope you succeed in doing this for the employees in your company. You might even have many job applicants from this board if you offer such a terrific 401k plan. I hope you have a nice matching contribution as well. Everyone will want to work at your company.

Laura

[leonard]

I noticed you did not have Mid-cap selections in your set up. I am guessing that is because the slice and dice is usually small and value tilt - not Mid.

Did you get any feedback after the fact of people requesting any mid cap? Or was it a non-issue?

Although I personally wouldn't use Mid Cap, I included 2 to provide a more complete set of options similar to other 401ks. Although, I do struggle with providing the complexity for employees of having additional, potentially confusing options.

[tfb]