Employee fiduciary 401k

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Calabria
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Joined: Sat Jan 17, 2015 1:15 pm

Employee fiduciary 401k

Post by Calabria » Sat Jan 17, 2015 1:32 pm

I am a small business owner looking to reduce 401k expenses for my employees and myself. I recently have been researching employee fiduciary as a plan administrator. Does anyone have any experience with them. How has it worked out. Any positive or negative comments would be appreciated.

Grt2bOutdoors
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Re: Employee fiduciary 401k

Post by Grt2bOutdoors » Sat Jan 17, 2015 3:07 pm

Calabria wrote:I am a small business owner looking to reduce 401k expenses for my employees and myself. I recently have been researching employee fiduciary as a plan administrator. Does anyone have any experience with them. How has it worked out. Any positive or negative comments would be appreciated.
Search the forum, they've been recommended before I believe.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

retiredjg
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Re: Employee fiduciary 401k

Post by retiredjg » Sat Jan 17, 2015 4:09 pm

Employee Fiduciary has gotten many positive reviews over the years. I don't recall any negative ones.

If you go to the google box in the top left and type in Employee Fiduciary you will find a lot of information.

leonard
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Re: Employee fiduciary 401k

Post by leonard » Sat Jan 17, 2015 10:44 pm

Calabria wrote:I am a small business owner looking to reduce 401k expenses for my employees and myself. I recently have been researching employee fiduciary as a plan administrator. Does anyone have any experience with them. How has it worked out. Any positive or negative comments would be appreciated.
They're pretty much the benchmark for low cost 401k's for small/medium businesses.

But, as always, get a couple competitive quotes.
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

entraining
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Re: Employee fiduciary 401k

Post by entraining » Fri Jan 30, 2015 10:56 am

I can't speak much to EF, but on the surface it looks pretty good.

I will say that that it pays to shop around. What I mean by that is that some low cost 401k providers may not be able to provide you the customization you want/need to maximize your employer/owner deferral while minimizing your employee deferral.

For example, when we were doing our comparison between theonline401k (changed their name to Ubiquity) and a small local administrator, Ubiquity really shined when it came to recordkeeping/brokerage expenses versus the small local administrator who wanted to charge 1% AUM for < 1 million. Most other expenses were about the same between the two.

However, where Ubiquity was lacking is they had a simple 401k option (no bells and whistles) and then a "custom" 401k option which costs a little more but allows for gradual vesting, allows for some manipulation of profit sharing, etc. The custom 401k option though only had two boilerplate scenarios to tweak the top heavy distribution when it came to profit sharing. Now for 80% of the market this might work (i.e. a doctor's office where the doctor is significantly older than his employees), but for our office it didn't work.

In our case, the small local administrator had customized a plan so that profit sharing disparity would be more skewed to the owners whereas at Ubiquity the scenarios we received basically required us to profit share the same percentage across the board. Again, this isn't important to everyone and for most a simple low cost 401k solution is the way to go. But if your small business doesn't fit into the standard cookie cutter approach and you want options on the best way to maximize your employer deferral potential without having to give away too much then it definitely makes sense to shop around.

leonard
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Re: Employee fiduciary 401k

Post by leonard » Fri Jan 30, 2015 12:09 pm

entraining wrote:I can't speak much to EF, but on the surface it looks pretty good.

I will say that that it pays to shop around. What I mean by that is that some low cost 401k providers may not be able to provide you the customization you want/need to maximize your employer/owner deferral while minimizing your employee deferral.

For example, when we were doing our comparison between theonline401k (changed their name to Ubiquity) and a small local administrator, Ubiquity really shined when it came to recordkeeping/brokerage expenses versus the small local administrator who wanted to charge 1% AUM for < 1 million. Most other expenses were about the same between the two.

However, where Ubiquity was lacking is they had a simple 401k option (no bells and whistles) and then a "custom" 401k option which costs a little more but allows for gradual vesting, allows for some manipulation of profit sharing, etc. The custom 401k option though only had two boilerplate scenarios to tweak the top heavy distribution when it came to profit sharing. Now for 80% of the market this might work (i.e. a doctor's office where the doctor is significantly older than his employees), but for our office it didn't work.

In our case, the small local administrator had customized a plan so that profit sharing disparity would be more skewed to the owners whereas at Ubiquity the scenarios we received basically required us to profit share the same percentage across the board. Again, this isn't important to everyone and for most a simple low cost 401k solution is the way to go. But if your small business doesn't fit into the standard cookie cutter approach and you want options on the best way to maximize your employer deferral potential without having to give away too much then it definitely makes sense to shop around.
I've never understood the "minimize the employee deferral". If the company simply manages it's total comp - lowering salaries a bit to compensate - they can provide the employees a great low cost 401k, have a safe harbor 401k, and profit sharing. Wins all the way around.
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

jnet2000
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Re: Employee fiduciary 401k

Post by jnet2000 » Fri Jan 30, 2015 3:29 pm

I had a 401k in place for my company but terminated it after analyzing our situation with our new CPA. We opted for a SIMPLA IRA with Vanguard. However, I can say I would NOT recommend our previous TPA, the Online 401k. I haven't heard a complaint about EF. I should have gone with them instead.
"You really don't need leverage in this world much. If you're smart, you're going to make a lot of money without borrowing" Warren Buffet

spindoc
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Re: Employee fiduciary 401k

Post by spindoc » Fri Jan 30, 2015 11:51 pm

My partner and I just did the 401K with Employee Fiduciary approx. mid 2014. This was the first benefit plan we've ever offered. Our experience was positive. We selected mostly low cost index funds and Target Retirement funds entirely from Vanguard. We have 9 employees. Today, in fact, I just renewed our agreement for 2015 where you specify the Match as well as whether you will participate in the Profit Sharing option, etc.

This is my first post. I just want to say that my lurking here has helped me in our fund selection as well as in our decision to go with Emp Fiduciary.....so thank you all.

spindoc

entraining
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Joined: Tue Jun 19, 2012 3:59 pm

Re: Employee fiduciary 401k

Post by entraining » Sat Jan 31, 2015 9:04 am

leonard wrote:
entraining wrote:I can't speak much to EF, but on the surface it looks pretty good.

I will say that that it pays to shop around. What I mean by that is that some low cost 401k providers may not be able to provide you the customization you want/need to maximize your employer/owner deferral while minimizing your employee deferral.

For example, when we were doing our comparison between theonline401k (changed their name to Ubiquity) and a small local administrator, Ubiquity really shined when it came to recordkeeping/brokerage expenses versus the small local administrator who wanted to charge 1% AUM for < 1 million. Most other expenses were about the same between the two.

However, where Ubiquity was lacking is they had a simple 401k option (no bells and whistles) and then a "custom" 401k option which costs a little more but allows for gradual vesting, allows for some manipulation of profit sharing, etc. The custom 401k option though only had two boilerplate scenarios to tweak the top heavy distribution when it came to profit sharing. Now for 80% of the market this might work (i.e. a doctor's office where the doctor is significantly older than his employees), but for our office it didn't work.

In our case, the small local administrator had customized a plan so that profit sharing disparity would be more skewed to the owners whereas at Ubiquity the scenarios we received basically required us to profit share the same percentage across the board. Again, this isn't important to everyone and for most a simple low cost 401k solution is the way to go. But if your small business doesn't fit into the standard cookie cutter approach and you want options on the best way to maximize your employer deferral potential without having to give away too much then it definitely makes sense to shop around.
I've never understood the "minimize the employee deferral". If the company simply manages it's total comp - lowering salaries a bit to compensate - they can provide the employees a great low cost 401k, have a safe harbor 401k, and profit sharing. Wins all the way around.
Not quite possible for all companies. At least for our business we do not know what the profit sharing amount will be before a few months after fiscal year end. You cannot manage total comp based on huge unknowns. Top employees still need to make a competitive salary in our market space.

In addition, I would be willing to wager most employees would want higher salary and lower employer deferral versus lower salary and higher employer deferral. If employees want to defer more with their higher salary it's easy...it's called employee elective deferral. And that way they at least have the choice of where the money goes.

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JamesSFO
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Re: Employee fiduciary 401k

Post by JamesSFO » Sat Jan 31, 2015 9:26 am

jnet2000 wrote:I had a 401k in place for my company but terminated it after analyzing our situation with our new CPA. We opted for a SIMPLA IRA with Vanguard. However, I can say I would NOT recommend our previous TPA, the Online 401k. I haven't heard a complaint about EF. I should have gone with them instead.
We use Ubiquity (f/k/a The Online 401K) they are adequate. As was noted customization is limited, but when I look at the fact that I have a plan with $1M in assets and TOTAL cost to run the plan is ~$2-3K/year what can I reasonably expect? FWIW, our office manager has run plans with Fidelity and she finds Ubiquity easier to deal with than Fidelity so go figure. We managed to get our Ubiquity-run plan rated by brightscope and it was in the top ratings (~93 or so score)

As for the remark about customization and compensation, I think both are true. Ubiquity's customization options are somewhat limited vs. more expensive TPAs. On the compensation front theoretically it should work, but practically it does not.

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JamesSFO
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Re: Employee fiduciary 401k

Post by JamesSFO » Sat Jan 31, 2015 9:30 am

Oh and to relate to the OP's question, if you are looking into Employee Fiduciary, you should give Ubquity (f/k/a The Online 401K) a shot at a bid. When I reached out to Ubquity, EF, and Vanguard in fall 2013 to move our 401K, EF was completely non-responsive to me. Vanguard was upfront and very expensive and said we shouldn't use them. Ubiquity was responsive and helpful and we went with them.

pkcrafter
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Re: Employee fiduciary 401k

Post by pkcrafter » Sat Jan 31, 2015 10:26 am

Allan Roth's article (2011) on best 401k provider for small business.

http://www.cbsnews.com/news/best-small- ... -provider/

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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