401K Plan for Small Business

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Portfolio7
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401K Plan for Small Business

Post by Portfolio7 » Sat Jul 29, 2017 5:07 pm

I'm not sure if this is the right place to ask this, but looking for any advice on 401K Plans for small businesses. My wife's business currently uses Dyatech, and it's loaded with American Funds at 1.4% fees or more. Plan Cost is cheap, $500 annually. Less than 10 Employees on the plan.

I ran a finacial 10 year compare to ADP, Emp Fiduciary, Betterment, America's Best, and Guideline (having decided Vanguard and Fidelity run a bit high, and not being able to get any good info on their costs... maybe it's out there somewhere?) I've seen enough complaints about Ubiquity that I ruled it out.

Net, all these options were cheaper than the current plan, when I consider cost to the business, and to the employees together. Over 10 years, we're talking $30K to $60K cheaper, if my data is accurate. I think even Dyatech has a better plan now, but couldn't get good data on it. My wife has talked to a couple of these firms, but getting comparable info is time consuming.

I'm leaning towards recommending Employee Fiduciary - They seem to be the cheapest or nearly so, appear to have a very good rep. What I'm really unclear on is how important the ancillary considerations are:

Fiduciary requirements
Liability
Record Keeping (and form 5500)
Financial advice (not supplied by EF, I believe. I don't think we need this, decently savvy group, but not sure what should be considered.)

Appreciate any advice, either on suggestions of issues to pursue, or personal experience.
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anil686
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Re: 401K Plan for Small Business

Post by anil686 » Sat Jul 29, 2017 5:42 pm

We use Ascensus/Vanguard - total cost for our group (8 employees but same cost up to 15) is $3600 for both TPA and recordkeeping services per year total. The use admiral shares and for any funds without admiral shares (i.e. TR funds) there is a rebate to bring the cost down to the equivalent of admiral shares for the underlying funds. We like them a lot but have heard good things about EF too. Good luck to you...

pkcrafter
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Re: 401K Plan for Small Business

Post by pkcrafter » Sat Jul 29, 2017 6:04 pm

Agree with Anil's recommendations. Lot of discussion about Employee Fiduciary--you can do a forum search, but check with Schwab as well.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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Portfolio7
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Re: 401K Plan for Small Business

Post by Portfolio7 » Sun Jul 30, 2017 4:31 pm

Thanks, appreciate the comments. It's a difficult area to do compares, I'll look into V/A as well.
An investment in knowledge pays the best interest.

anil686
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Re: 401K Plan for Small Business

Post by anil686 » Sun Jul 30, 2017 4:40 pm

Portfolio7 wrote:Thanks, appreciate the comments. It's a difficult area to do compares, I'll look into V/A as well.
When you call Vanguard small business - make sure they know how small you are. That helps - they have pretty straightforward plans for fixed costs for very small businesses (like under 15 people). Sometimes when you call small business - they don't realize how small you are and assume you are much bigger than you are. Our old financial advisor said VG did not do plans unless you had over $3 million in assets - that was not true - we had very little in assets and they were really helpful. Hope that helps...

Spirit Rider
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Re: 401K Plan for Small Business

Post by Spirit Rider » Sun Jul 30, 2017 6:07 pm

anil686 wrote:
Portfolio7 wrote:Thanks, appreciate the comments. It's a difficult area to do compares, I'll look into V/A as well.
When you call Vanguard small business - make sure they know how small you are. That helps - they have pretty straightforward plans for fixed costs for very small businesses (like under 15 people). Sometimes when you call small business - they don't realize how small you are and assume you are much bigger than you are. Our old financial advisor said VG did not do plans unless you had over $3 million in assets - that was not true - we had very little in assets and they were really helpful. Hope that helps...
Actually, Vanguard themselves do not offer 401k plans to small businesses unless the assets are > $20M.

The plan identified by anil686 is co-marketed by Vanguard and Ascensus. Vanguard is the custodian of the account and it is Acesensus who is the Administrator/Recordkeeper. If you call Vanguard, they are simply going to pass the lead on to Ascensus. Given Vanguard's recent problems with customer service, it is advised people contact Ascensus directly.

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Portfolio7
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Re: 401K Plan for Small Business

Post by Portfolio7 » Sun Jul 30, 2017 9:55 pm

Spirit Rider wrote:
anil686 wrote:
Portfolio7 wrote:Thanks, appreciate the comments. It's a difficult area to do compares, I'll look into V/A as well.
When you call Vanguard small business - make sure they know how small you are. That helps - they have pretty straightforward plans for fixed costs for very small businesses (like under 15 people). Sometimes when you call small business - they don't realize how small you are and assume you are much bigger than you are. Our old financial advisor said VG did not do plans unless you had over $3 million in assets - that was not true - we had very little in assets and they were really helpful. Hope that helps...
Actually, Vanguard themselves do not offer 401k plans to small businesses unless the assets are > $20M.

The plan identified by anil686 is co-marketed by Vanguard and Ascensus. Vanguard is the custodian of the account and it is Acesensus who is the Administrator/Recordkeeper. If you call Vanguard, they are simply going to pass the lead on to Ascensus. Given Vanguard's recent problems with customer service, it is advised people contact Ascensus directly.
Thanks! It's a good tip to call Ascensus directly. Their web site doesn't seem all that helpful, but I understand these firms benefit from making it hard to compare. It sounds like they might be an option. My wife and her partner would have to directly solicit V/A to get the details, of course, I just want to help them with 2 or preferably 3 strong candidates. I started with cost, to eliminate the worst players, and then have been looking at reputation & value proposition (this last one is difficult). It sounds like they should be asking EF & V/A for quotes. I missed the quote below in my prior searches, which seems to confirm the track we're on:

[quote=ERISA Stone wrote:
I received a quote from Vanguard last month. It's $2500 for unbundled services, plus an additional $70/participant over 15 participants. I think the $3500 quote you received was for bundled service. I ended up with Employee Fiduciary. It's hard to beat their prices. [/quote]
An investment in knowledge pays the best interest.

Incendiary
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Re: 401K Plan for Small Business

Post by Incendiary » Sun Jul 30, 2017 10:00 pm

Paychex will also administer 401k accounts for small businesses at attractive rates.

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Portfolio7
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Re: 401K Plan for Small Business

Post by Portfolio7 » Mon Jul 31, 2017 6:04 pm

Thanks! I've looked at them also, but with less rigor.

I've heard Paychex competes against (and their terms are similar to) ADP - the initial rate data I dredged up from various sources seemed consistent with ADP, anyways... ADP is in the running because my wife's firm uses them for payroll, they offer Vanguard Index funds, and they do have ease of use going for them. ADP seems much improved vs 5 years ago, but at the same time can't match EF on cost for <10 employees. Still, I'll keep Paychex in mind if the others fail to pan out.
An investment in knowledge pays the best interest.

Incendiary
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Re: 401K Plan for Small Business

Post by Incendiary » Mon Jul 31, 2017 11:04 pm

I will confirm that Paychex also offers Vanguard funds. I think most of them are offered at Admiral pricing as well, IIRC.

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