401k for small businesses

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infotrader
Posts: 104
Joined: Tue Feb 28, 2017 2:39 pm

401k for small businesses

Post by infotrader » Mon Jun 19, 2017 2:42 pm

I am posting this message for a friend who is trying to setup a 401k-like retirement savings plan for his little startup with 20 employees.

One option he is considering is Captain401 which specializes in startup retirement plans, but their fees feel very high (besides employer cost, annual cost to employees is 0.50% of their account balance, we were hoping something closer to typical index fund fees). You can find information about their pricing at https://captain401.com/pricing.

My question is: is there any better way to do it, such as setting up certain plan/accounts directly with Vanguard, etc. Or, if he can have his own personal 401k?

Thanks you!

Spirit Rider
Posts: 7813
Joined: Fri Mar 02, 2007 2:39 pm

Re: 401k for small businesses

Post by Spirit Rider » Mon Jun 19, 2017 3:02 pm

Your friend should look into Employee Fiduciary or Guideline.

Employee Fiduciary fees are $500 startup, $1,500/year for up to 30 employees ($30/year each additional employee) and 0,08% AUM fee.

Guideline fees are $500 startup, $8/month/employee 40/month minimum ($1,920/year for 20 employees).

Employee Fiduciary is well recommended by BH members with their plan. Guideline is relatively new, very inexpensive for very small plans, but shorter track record and few references.

Vanguard does not offer 401k plans for company''s with < $20M in assets. They co-market a plan administered by Ascensus. Last I knew Ascensus fees are $1,500 startup, $3,475/year for 30 employees ($30/year each additional employee).

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siamond
Posts: 3863
Joined: Mon May 28, 2012 5:50 am

Re: 401k for small businesses

Post by siamond » Sat May 12, 2018 3:19 pm

I was checking this thread from last year... Captain401 renamed itself as Human Interest. Their pricing remains very attractive for the employer, but shifts the burden on employees by slapping a 0.5% fee on top of index funds like Vanguard, which defeats the point of using low-costs investment vehicles... Plus frankly, when you look at their management team, it is hard to get a sense of proper combined experience.

I really like the idea of startups disrupting this old crusty 401k market with high-tech automation combined with index funds though.

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