Non-Profit Retirement Plans

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
pancake19
Posts: 94
Joined: Thu Jan 16, 2014 1:46 pm

Non-Profit Retirement Plans

Post by pancake19 » Tue Jun 11, 2019 12:24 pm

Hi, I help out a small non-profit (3-5 employees) that has never had a retirement program but are currently considering it.

Does anyone have experience in this? I don't know the options, vendors, costs, etc. What do very small and low budget organizations typically do on this front?

User avatar
hand
Posts: 1289
Joined: Sun May 17, 2009 8:42 pm

Re: Non-Profit Retirement Plans

Post by hand » Tue Jun 11, 2019 12:37 pm

I recently went through similar with a "mid-sized" charity ($1-2M in retirement assets).

We looked at Employee Fiduciary, Vanguard, Fidelity and Ubiquity for 401(k).

We ended up with Vanguard, though at a cost premium over Employee Fiduciary.
Cost savings would have been more dramatic with Employee Fiduciary for a smaller organization and reputation was really positive.

I was not directly involved in vetting the other providers we considered.

For a very small organization, a 401(k) may not be cost effective, but I am not knowledgable about alternatives.

Good Luck, and be sure to frame the discussion as one of total costs (charity + participant) rather than simply cost to the charity.

sawhorse
Posts: 3241
Joined: Sun Mar 01, 2015 7:05 pm

Re: Non-Profit Retirement Plans

Post by sawhorse » Tue Jun 11, 2019 11:37 pm

Would TIAA CREF be an option as they specialize in non-profit plans? With an organization that size, however, if you can get a plan with them, you'd be in R1 and thus pay the highest expense ratios.

jbranx
Moderator
Posts: 1214
Joined: Thu Feb 09, 2017 6:57 pm

Re: Non-Profit Retirement Plans

Post by jbranx » Tue Jun 11, 2019 11:41 pm

{Topi is now in Personal Investments} posting.php?mode=reply&f=1&t=283163

User avatar
teen persuasion
Posts: 815
Joined: Sun Oct 25, 2015 1:43 pm

Re: Non-Profit Retirement Plans

Post by teen persuasion » Wed Jun 12, 2019 7:38 am

My employer is considering starting a SIMPLE IRA for us (3 employees to participate).

Initially the Board of Trustees contacted the Wells Fargo guy who invests the endowment fund. I was concerned about investment costs, so I did some homework and looked at Fidelity, Schwab, and Vanguard. We could open a SIMPLE IRA at any of them. Vanguard (my preference as I have Roth IRAs there) had a fee per fund per person per year, until you have $50k invested. I meet that, so could avoid fees, but my colleagues would have fees. Fidelity had no fees to open accounts, but had a limited list of funds available in the SIMPLE IRA, and there were all high fee managed funds. Schwab had no fees to set up, and no restrictions. They also had clear instructions on their website for setting up SIMPLE IRA accounts, all forms needed to do it.

I'm working with the board treasurer to move this along - I'd really like to avoid the excessive costs and managed funds of the Wells Fargo plan, so I've done all the research on Schwab and passed it on to the treasurer (to present to the full Board, who ultimately have to approve). The Board aren't comfortable with investing, they'd rather pass it off to an "expert", so it's a tough decision for them. If they do decide to go with WF just to CYA, I understand, and will still be happy just to get the opportunity to contribute to something beyond my Roth IRA. I'm just concerned for my inexperienced colleagues, being "helped" by WF.

Topic Author
pancake19
Posts: 94
Joined: Thu Jan 16, 2014 1:46 pm

Re: Non-Profit Retirement Plans

Post by pancake19 » Wed Jun 12, 2019 9:17 am

@teen persuasion: any knowledge / reason why you went with a SIMPLE rather than a SEP?

User avatar
teen persuasion
Posts: 815
Joined: Sun Oct 25, 2015 1:43 pm

Re: Non-Profit Retirement Plans

Post by teen persuasion » Wed Jun 12, 2019 11:48 am

SEP is employer only contributions, SIMPLE is both employer and employee contributions.

I want to contribute pre-tax (for tax credit purposes), and my employer doesn't have the $$ to fund retirement for us at any meaningful scale. The SIMPLE IRA employer contribution is 2% if the employer chooses to contribute for every employee (even if that employee doesn't contribute), or 3% if the employer only contributes for employees who contribute (so it's a match to 3%).

The SIMPLE contribution limit for employees is $13k annually, plus $3k catchup for employees age 50+.

Post Reply