Vanguard for business 401K?

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ylee
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Vanguard for business 401K?

Post by ylee » Sat Sep 22, 2018 9:37 pm

Our current 401K charges 40 bps for AUM and we have 6 HCE's and about 50 non-HCE's with about 10MM in assets. Anybody have any experience in setting up Vanguard 401K plan without use of a 3(38) fiduciary? If so, what has been your experience and can you recommend a TPA to help with plan?

Any input would be greatly appreciated

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BoglePaul
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Re: Vanguard for business 401K?

Post by BoglePaul » Sun Sep 23, 2018 5:58 am

We went through paychex 401k, adp 401k and Fidelity 401k. We seriously considered Vanguard and wanted to go with them. In the end we went with Fidelity because they perform their own record keeping (Vanguard outsources to a 3rd Party for 401ks with assets under $25M). We have found Fidelity to be reliable and competent on the record keeping / IT side. Fidelity was also the lowest cost. For us, less problems was more important. Our 401k contains mostly Vanguard funds even though it is hosted by Fidelity. In fact, our 401k only contains one Fidelity fund.

I am a huge fan of Vanguard but unless ur 401k has more than 25M in assets, I feel Fidelity is a better choice.

ylee
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Re: Vanguard for business 401K?

Post by ylee » Sun Sep 23, 2018 7:23 am

Thanks for the response. Just a couple more questions regarding Fidelity. What do they charge? Did you have to hire your own TPA and if you did, how did you find one? Also, did you hire a 3(38) fiduciary and do you feel one is necessary?

Thanks again

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beyou
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Re: Vanguard for business 401K?

Post by beyou » Sun Sep 23, 2018 8:11 am

My former large employer used Vanguard and felt their service was excellent. Looked like just another account on the website for me. I guess for smaller plans you don’t get that simplification benefit.

sixty40
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Re: Vanguard for business 401K?

Post by sixty40 » Sun Sep 23, 2018 9:10 am

We use Hicks Pension Services as our TPA and we are very happy with them, they are very responsive to any questions you have, we have used them for the past 20yrs. I am not familiar with a 3(38)? I looked into vanguard but a couple of our employees need more face to face interaction and Vanguard does not offer that with smaller accounts, or maybe any size accounts.

geekpryde
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Re: Vanguard for business 401K?

Post by geekpryde » Mon Sep 24, 2018 12:08 pm

About 12 months ago I went through the vendor selection and creation of a small company 401(k) startup (by startup I mean plans that dont yet exist, and therefore ZERO dollars in them, the business is not a startup). I was expecting about 50% of the company, or around 25 people to participate. We looked at American, Merrill Lynch, Fidelity, Vanguard, and a few others that were quickly ruled out as being ridiculously expensive and bad.

To keep a very long story and process short, we only seriously considered Vanguard and Fidelity. Most of the others are all hot-air, short on details, and want to sell you crap at a premium price. Fidelity was honest with me and basically said they don't really want or like small start-up plans with 0 dollars. They price it in such a way that basically no small plans sign up with them, even though it it technically possible, and they recommend you wait until plan is of certain size and then they make migrating to them easy and possibly worthwhile. So, while they didn't want my business, they explained it to me, didnt waste me time, and also I think they do offer a very good platform for larger plans. I would consider them in the future.

Vanguard on the other hand, actively recruits small start-up plans. So, they have a quasi third party in place to sort of hold your hand and walk you through the steps. I say quasi third party, because they do a pretty good job and are integrated with VG very well, and for some parts of the process, you are working with actual VG employees, so it doesn't really seem like I worked with a third party, essentially feels like a special department within VG.

While it was a long process, they were super helpful and accommodating of all my crazy questions and spent literally months with me so I could make the owners here feel very comfortable. I feel like I could go on-and-on about the design and creation process of the VG 401(K) plan, but as a quick recommendation and summary:

Yes, I would strongly recommend Vanguard as a 401(k) provider, even for tiny plans.

ylee
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Re: Vanguard for business 401K?

Post by ylee » Mon Sep 24, 2018 12:33 pm

geekpryde wrote:
Mon Sep 24, 2018 12:08 pm
Yes, I would strongly recommend Vanguard as a 401(k) provider, even for tiny plans.
Thanks for your input! Did you use a TPA and who did you use and what were the costs involved? We are leaning toward making the move to Vanguard and appreciate any and all help we can get

JiggyWillis
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Re: Vanguard for business 401K?

Post by JiggyWillis » Mon Sep 24, 2018 1:25 pm

Take a look at Guideline. They are philosophically very BH compatible and offer mainly Vanguard funds. They do not charge AUM based fees, only flat fee of $6 or $7 per participant monthly. They bundle all necessary reporting and administrative tasks. they pull everything from your payroll provider and communicate directly with your employees via email-very efficient. We are six months with them and very pleased thus far.

geekpryde
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Re: Vanguard for business 401K?

Post by geekpryde » Mon Sep 24, 2018 1:42 pm

ylee wrote:
Mon Sep 24, 2018 12:33 pm
geekpryde wrote:
Mon Sep 24, 2018 12:08 pm
Yes, I would strongly recommend Vanguard as a 401(k) provider, even for tiny plans.
Thanks for your input! Did you use a TPA and who did you use and what were the costs involved? We are leaning toward making the move to Vanguard and appreciate any and all help we can get
Our plan is administered by Ascensus, which is the company Vanguard uses for the 401(k) plans, well at least for the small ones. They do most of the work, but our HR person here also does some of the work (like the weekly payrol stuff).

So, I was working both with Vanguard people AND Ascensus people, to get the plan designed, created, launched, etc. Basically about 3 contacts depending on what aspect of the plan we were working on. They will walk you through every step.

Meaning, since we went with Vanguard directly, not merely vanguard products within another plan, we worked with Ascensus, whom VG chose as the TPA, (I didnt chose Ascensus, but would recommend them).

I would just call Vanguard Retirement Plan Access, and they can explain it all to you better than I can. Phone: Call 888-684-401K or Phone: 866-477-3644 or check below.

https://institutional.vanguard.com/web/ ... plan/focus

ylee
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Re: Vanguard for business 401K?

Post by ylee » Mon Sep 24, 2018 3:03 pm

JiggyWillis wrote:
Mon Sep 24, 2018 1:25 pm
Take a look at Guideline. They are philosophically very BH compatible and offer mainly Vanguard funds. They do not charge AUM based fees, only flat fee of $6 or $7 per participant monthly. They bundle all necessary reporting and administrative tasks. they pull everything from your payroll provider and communicate directly with your employees via email-very efficient. We are six months with them and very pleased thus far.
Thanks, it looks like fees may be $8/employee/month now and with close to 60 employees, may not work out overall compared to Vanguard. Will look into further though.

Thanks again

ylee
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Joined: Sun Jul 01, 2018 5:32 pm

Re: Vanguard for business 401K?

Post by ylee » Mon Sep 24, 2018 3:17 pm

geekpryde wrote:
Mon Sep 24, 2018 12:08 pm
While it was a long process, they were super helpful and accommodating of all my crazy questions and spent literally months with me so I could make the owners here feel very comfortable.
Thanks again, we are looking it over. Can I e-mail you if any questions come up? Don't actually know how that works here, do you?

miriamele
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Re: Vanguard for business 401K?

Post by miriamele » Mon Sep 24, 2018 4:11 pm

Hi ylee - I'm a first time poster - long time lurker. As an HR person, this is one of my passions! I've moved 401(k) plans four or five times and started a couple from scratch. I recently moved my current company's 401(k) to Vanguard and we also seriously considered Fidelity. We had 16 mill in assets and I was able to get Vanguard to take us direct (no TPA) rather than through Ascensus since we are growing quickly - now at 19 mill 10 months later. :D

I think both are good and we have a 100% index and target date fund lineup. Employer pays all the fees, participants just pay exp. ratio and fees for services such as loans, etc. With Vanguard, Mesirow Financial offers 3(21) and 3(38) services and they quoted us 5 and 8 basis points respectively. We chose not to elect that service as we didn't see the value but that's up to each plan sponsor to decide on behalf of the participants.

For smaller plans I've heard good things about Employee Fiduciary but I have no direct experience.

This can be a daunting task so I am more than happy to communicate with you directly via email if you like.

Pulling Hard
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Re: Vanguard for business 401K?

Post by Pulling Hard » Mon Sep 24, 2018 5:28 pm

I use Vanguard/Ascensus for my small company 401K. They are very easy to work with and we get Admiral shares, so that’s a big plus. Would highly recommend them. They have a fixed fee for small companies, I think it is like $3,500 a year for up to 15 people - but you should call them to get the actual numbers. When I looked at the savings in fund fees we got with the Admiral shares, it was a no brainer.

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