6 Best 403(b) Companies

403(b) plans are retirement plans for those with a job that doesn’t offer benefits and often times don’t have health insurance. Knowing which companies offer the best 403(b) plan is important so you can make an educated decision when choosing one.

403(b) plans are a type of retirement plan that allows employees to save money for their retirement. There are many companies out there who offer 403(b) plans, but the 6 best providers were chosen based on how they treat their employees.

A 403(b) tax-deferred annuity plan is a kind of retirement plan utilized by organizations to encourage workers to save by combining pre-tax and post-tax contributions. We searched for providers with the most cost-effective investment alternatives, the finest Service to Customers, and extra services to assist employers and participants to choose the top 403(b) organizations.

Human Interest offers efficient 403(b) programs that make use of cutting-edge technology to expedite the process and save administrative expenses. Monthly plans start at at $120. To learn more about low-cost solutions, contact an agent today.

Human Interest is a great place to start.

Top 403(b) Businesses

How Did We Decide Which 403(b) Provider Was the Best?

Only specific types of organizations, religious groups, health and education institutions, and government entities may utilize 403(b) plans. Employers that employ 403(b) plans have unique requirements, since the establishment and management of these plans might be more challenging owing to eligibility limits.

To find the top 403(b) providers, we evaluated them based on a number of factors, including the following:

• Setup and administration ease: How simple it is for employers to set up and operate a 403(b) plan.
• Investment possibilities: The range of investments available in a 403(b) plan from various providers; 403(b) programs’ Options for Investing are restricted to annuities, mutual funds, and target date funds.
• Price: The costs of plan administration and investment alternatives offered by various providers.
• Service to Customers: A provider’s capacity to assist with plan setup and management as needed.
• Services Not Included: What Services Not Included do providers provide in addition to 403(b) plans that an employer could find useful?
• Assets under management: The total amount of 403(b) assets that a provider manages.

If you already have a connection with a 403(b) plan provider, they may be able to give you with the best administrative expenses. If you don’t have a connection, we propose Vanguard as the top 403(b) business after studying 403(b) firms based on the following criteria.

Vanguard is the best overall 403(b) company.

Vanguard is the greatest overall 403(b) provider since it is a well-known organization that provides low-cost, diversified investments throughout the country. Vanguard, the world’s biggest mutual fund firm, provides more than 50 professionally managed mutual funds that are ideal for long-term, passive investing.

What Vanguard Has to Offer

With more than $4.5 trillion in assets under administration, Vanguard is the world’s biggest mutual fund firm. It has more than 50 professionally managed mutual funds that are suitable for anybody with a 403(b) plan. Vanguard is a well-known company with a solid reputation for offering low-cost investing alternatives and retirement plans.

Options for Investing

Potential investment alternatives in a Vanguard 403(b) plan include:

• Money market mutual funds engage in short-term debt to offer high liquidity to investors.
• Bond funds are debt-focused mutual funds that invest in a bond portfolio to generate interest income for the portfolio.
• Equity funds seek to maximize profits by focusing their assets on stocks that are expected to gain in value.
• International funds: Concentrate investments in other nations to gain from development and currency changes in other countries.
• As a target retirement date approaches, target date funds automatically switch from equities to bonds.

Services Not Included

Vanguard is one of the best 403(b) companies because it offers straightforward, cost-efficient plans for qualifying nonprofit organizations. It provides access through 403(b) plans to more than 50 of the best mutual funds in the industry but doesn’t provide Services Not Included like banking that may benefit an employer.

Service to Customers

Historically, Vanguard’s business has been driven by financial advisers. As a result, Vanguard doesn’t have offices around the country where clients can get help. Vanguard provides clients with Service to Customers online and over the phone. However, clients who need additional assistance can also enlist the help of an adviser, most of whom offer Vanguard products.

Costs of Vanguard 403(b)

The following are typical Vanguard 403(b) plan costs:

• Recordkeeping charge ($5 per month per employee): Vanguard may maintain track of the records necessary for 403(b) plans for a fee of $60 per participant each year.
• Annual fund cost ratio (average of 0.12% each fund): These fees are among the most affordable in the market, and they are automatically removed from funds to cover trading and fund administration expenses.
• Lending costs ($50 upfront plus $25 annually): Participants in plans that enable them to borrow against their retirement assets pay $50 when they take out a loan and another $25 each year the debt is unpaid.

Vanguard’s fees are exceptionally modest and clear, compared to the majority of other providers. Commissions, account maintenance fees, and asset-based administration costs are not charged.

What Is Vanguard Lacking?

Vanguard is a great provider of low-cost investments that are ideal in a 403(b) plan. However, it doesn’t provide individual advice on Options for Investing, banking services or offices around the country where you can get individual attention — you’ll need to hire a financial adviser for that.

TIAA is the best 403(b) provider for educational, healthcare, and government organizations.

In the 403(b) space, TIAA has a long history. It has by far the largest 403(b) assets, accounting for between 40% and 70% of the market nationally. TIAA began selling tax-deferred annuities to teachers more than a century ago, and its experience in this field makes it one of the top 403(b) providers for schools and teachers today.

What TIAA Has to Offer

For the firms it serves, TIAA acts as a single-point source for plan design, implementation, administration, recordkeeping and Options for Investing. 403(b) plans with TIAA aren’t charged commissions but are charges recordkeeping fees and expense ratios for Options for Investing as well as additional charges for custom portfolio services.

Options for Investing

Once you set up a 403(b) with TIAA, participants can be given access to several different types of Options for Investing. TIAA manages more than $1 trillion in assets between mutual funds and target date funds in addition to the tax-deferred annuities that the firm began selling more than 100 years ago.

The typical Options for Investing in a TIAA 403(b) include:

• Mutual funds: TIAA has its own line of mutual funds that are accessible commission-free to investors.
• Target date funds: TIAA’s in-house target date funds are available to participants, and they automatically rebalance when a target retirement date approaches.
• Annuities: TIAA’s oldest product is tax-deferred annuities, which are the foundation for today’s 403(b) plans.
• TIAA provides customized portfolio services at an extra cost to members who seek more personalised investment solutions.

Services Not Included

While TIAA offers a few Services Not Included, it is mostly centered on brokerage and investment management. It does not offer additional banking or brokerage services that might be found at other diversified financial services companies.

Specific Services Not Included available through TIAA include:

• Participants who desire to borrow against the assets in their 403(b) accounts may do so via TIAA.
• Bespoke portfolio service: For a fee, TIAA may design custom portfolios for clients who desire more personalised investment management.
• Brokerage: Participants in 403(b) plans with outside savings may invest those money in addition to their plan assets via TIAA.

Service to Customers

Unlike Vanguard, TIAA has offices in some major markets around the country, where you can potentially work with a dedicated adviser on all Service to Customers issues. However, while TIAA is a large provider, it is not a household brand known for servicing individual customer accounts. In addition to its modest network of offices around the country, it provides Service to Customers online and over the phone as necessary.

Costs of a TIAA 403(b) plan

The following are typical TIAA 403(b) costs:

• Recordkeeping ($44 per member each year): TIAA manages the recordkeeping for 403(b) programs. It costs a set price for each participant.
• Mutual fund and annuity expense ratio (0.5% to 2%): There are annual expenses charged by TIAA mutual funds and annuities used as Options for Investing in 403(b)s; these costs are automatically deducted from funds to cover trading and management.
• Custom portfolio services (0.5 percent to 2% of investment): These fees vary and are paid to customers who seek more personalized investment strategies; they include the investor’s pro-rata portion of investment charges for executing the plan.

TIAA is a prominent national provider that offers low-cost 403(b) plans. It sets plan costs on a case-by-case basis, although there are certain broad guidelines to follow.

What’s Wrong With TIAA-CREF?

TIAA focuses on teachers, healthcare workers and government agencies but doesn’t market to philanthropies or religious institutions that are typically eligible for 403(b) plans. It also doesn’t provide many Services Not Included or much information on fees. You’ll need to contact TIAA to get a better idea of what a 403(b) plan will cost.

Fidelity Investments is the best 403(b) provider with a network of offices.

Fidelity is one of the finest 403(b) businesses for having a wide network of offices, making it excellent for employers that want their employees to have access to a broad network of offices where they can obtain in-person counseling and personalized investing advice. Fidelity is one of the world’s major financial services organizations, offering a variety of banking and brokerage services as well as 403(b) plans.

What Fidelity Has to Offer

With nearly $2.5 trillion under management, Fidelity is a one-stop shop for employers who need a variety of financial services. While it is one of the best 403(b) providers, Fidelity is certainly not the cheapest nor does it offer Options for Investing that aren’t available elsewhere. Where Fidelity is one of the best 403(b) companies is for providing in-person advice and individual guidance to employers and plan participants.

Options for Investing

Options for Investing through a Fidelity 403(b) include:

• Target allocation mutual funds are Fidelity mutual funds allocated for a specific investing strategy based on a risk threshold.
• Fidelity provides a line of in-house target date funds that automatically rebalance when a preset retirement date approaches, despite the additional fees.
• Fidelity offers money market mutual funds that invest in short-term debt to provide high liquidity.
• Bond funds: Fidelity’s debt-focused mutual funds invest in bond portfolios to generate interest income.
• Fidelity offers high-yield bond funds for investors seeking larger returns. These funds invest in debt issued by riskier corporations that pay higher interest rates.

Fidelity funds can be used individually or in concert as part of an overall investment strategy. If you need help formulating an investment strategy, Fidelity representatives can help provide individual guidance and advice on specific Options for Investing.

Services Not Included

In addition to 403(b) plans, Fidelity offers a number of Services Not Included including:

• Investment advice: Fidelity can provide help picking individual Options for Investing
• Fidelity can assist organizations with managing financial resources and sweeping monies for retirement plan contributions when needed.
• Participants having money to invest outside of 403(b) plans may use Fidelity’s brokerage services to trade stocks, bonds, mutual funds, and ETFs.
• Fidelity offers education savings programs to participants who wish to start saving for their child’s education.
• Although Fidelity does not seem to provide annuities via 403(b) plans, it may assist members in purchasing annuities outside of their 403(b) accounts.
• Participants who desire to purchase term life, universal life, or long-term care insurance outside of their 403(b) account may do so via Fidelity.

Service to Customers

Fidelity has strong Service to Customers when compared to most other national providers. Unlike most other companies on this list, it has a large network of investor centers where you can work with individual reps if you’d prefer. Fidelity also provides Service to Customers through online and over the phone as administration issues arise.

Costs of Fidelity 403(b)

Typical Costs of Fidelity 403(b) include:

• Custodian fees: For keeping 403(b) funds, Fidelity normally charges $24 per year each participant.
• Charge for account management and recordkeeping: This fee is determined by the size of the plan, the number of members, and other considerations. It’s usually a one-time yearly cost for each participant.
• Expense ratios of mutual funds (from 0.05 percent to 1.25 percent): The trading and account administration charges of mutual funds provided in Fidelity 403(b) plans are taken automatically from mutual funds, beginning as low as 0.05 percent for specific Fidelity funds.

Fidelity, like other top 403(b) firms, charges different fees depending on the size of the plan, the number of members, and other considerations. Custodial fees, account maintenance and recordkeeping fees, and yearly cost ratios for mutual funds inside a 403(b) plan should all be expected by employers that set up 403(b) programs with Fidelity.

What Is Fidelity Lacking?

Fidelity is a well-known, established provider of financial services. However, for certain services like 403(b) plans, Fidelity makes very few Options for Investing available through 403(b)s and has less experience in the space compared to Vanguard and TIAA.

T. Rowe Price is the best 403(b) provider for market research.

T. Rowe Price is one of the greatest financial services organizations for offering individual investors with financial literacy and research tools. T. Rowe Price 403(b) Plans may give members with a variety of high-quality market information and investor education resources to help them make educated choices about their saving and investing strategies.

T. Rowe Price’s Services

T. Rowe offers its own line of mutual funds to 403(b) clients as well as high-value, independent research and a host of Services Not Included. Although T. Rowe Price’s operation centers on fund management, it also provides a host of investment advisory and brokerage services, education savings plans and additional investment services for assets outside of 403(b) plans.

Options for Investing

T. Rowe Price administers almost $1 trillion in mutual funds, including the following:

• Stock funds allow investors to concentrate their money in stock investing.
• Bond funds are debt-based assets that are used to generate income for a portfolio.
• Money market mutual funds are funds that invest in short-term debt to offer high liquidity to investors.
• Mutual funds that automatically rebalance from equities to bonds as you come closer to your planned retirement date.

Services Not Included

Aside from 403(b) plans, T. Rowe Price provides a number of Services Not Included including:

• T. Rowe Price’s independent market research is well-regarded in the business and can assist investors in making sound investment selections.
• T. Rowe offers education savings plans to plan members who desire to save for their children’s education.
• T. Rowe Price can assist you in incorporating assets other than your 403(b) into an overall investment strategy if you have them.
• Investment advisory services: T. Rowe Price can assist investors who need help picking individual Options for Investing
• T. Rowe Price can assist you with securities brokerage if you wish to trade stocks, bonds, ETFs, or other assets outside of your 403(b).

T. Rowe Price began as an asset management company, but it now offers a broad range of investment management and financial services. The business places a strong focus on research and investor education, which is where 403(b) plans may benefit the most.

Service to Customers

T. Rowe Price doesn’t have retail offices. Its funds and investment products are available through independent financial advisers around the country. However, if you go directly to T. Rowe Price for a 403(b), you aren’t going to get a dedicated rep. You’ll need to handle Service to Customers online and over the phone.

Costs of T. Rowe Price 403(b)

The following are the costs of a T. Rowe Price 403(b):

• Expense ratios of mutual funds (0.45 percent to 4.5 percent annually): These fees range from 0.6 percent to 1.5 percent, and they are withdrawn automatically from your account to cover trading and administrative costs.
• T. Rowe Price offers a small annual service fee of $20 per participant that is waived for members who have more than $10,000 in their 403(b), more than $50,000 total in all T. Rowe Price accounts, or subscribe to electronic delivery of statements and confirmations.

What Is T. Rowe Price Lacking?

T. Rowe Price provides a lot of investor education and market analysis, but it doesn’t have any locations around the nation where you may get specific financial counseling. It also provides very little comprehensive price information online – to have a better understanding of plan pricing, you’ll need to contact the firm directly and look up provider information on your organization’s website.

Best 403(b) for Sector-focused Options for Investing: Franklin Templeton

Franklin Templeton is the world’s fourth biggest mutual fund firm. Franklin offers one of the most varied mutual fund lineups in the market, with over 100 mutual funds and retirement plan alternatives, including non-ERISA 403(b)s. It’s great for anybody who wishes to concentrate their assets on specialized industries, such as gold or oil and gas.

Franklin Templeton’s Services

Franklin Templeton is a financial services firm that manages over $700 billion in over 100 customized mutual funds. It has the most sector-focused mutual funds, each with numerous share classes to meet the needs of individual investors. Franklin is a well-known corporation with a solid track record. Franklin provides a variety of retirement plans, including non-ERISA 403(b) plans, in addition to its fund selection.

Options for Investing

Franklin Templeton 403(b) Options for Investing include:

• Money market mutual funds invest in CDs and short-term debt to provide investors with a high level of liquidity and, on occasion, a low return.
• Bond funds are debt-focused funds that maintain a portfolio of bonds in order to generate interest income for investors.
• Equity funds are mutual funds that invest in equities in the hopes of increasing their value or receiving dividend income.
• International funds: Invest in overseas assets to profit from economic growth and currency volatility in other nations.
• Franklin Templeton provides a few target date funds, which usually have higher fees and automatically rebalance between stocks and bonds as you move closer to your retirement date.
• Franklin Templeton offers a variety of mutual funds that specialize in various industries, such as gold, oil and gas, or utilities.

Franklin Templeton isn’t the cheapest mutual fund company, but its extensive product lineup makes it one of the top mutual fund companies — and one of the best 403(b) businesses — in the business. Some of the greatest sector-focused mutual funds are among its offerings.

Services Not Included

Franklin Templeton offers no Services Not Included like lending, securities brokerage or banking services. Its offerings are focused almost exclusively on mutual funds and retirement plan solutions that investors can use to invest in their funds.

Service to Customers

Franklin Templeton won’t provide you with a dedicated representative but its Service to Customers representatives are generally very helpful. If you prefer to work with a dedicated adviser, you can hire an independent financial adviser who can sell Franklin Templeton funds. This will come with additional costs, but your adviser can provide more one-on-one guidance and investment advice when necessary.

Costs of the Franklin Templeton 403(b) Plan

The following expenses are included in the Franklin Templeton 403(b) costs:

• Expense ratio of mutual funds (0.5 percent to 1 percent each fund): Covers management and trading expenses.
• Account maintenance costs ($30 to $35): Franklin charges $35 per year to keep 403(b) accounts with balances under $50,000; investors with balances above $50,000 pay $30 per year.
• Charges (0.5% to 5.75%): On first acquisitions or redemptions, certain Franklin mutual fund classes levy costs; these commissions vary according on the share class you buy and the amount you invest; some funds also offer commission-free shares.

Franklin is not the cheapest 403(b) provider, while being one of the finest for non-ERISA protected plans. It has low fund cost ratios and account maintenance fees, but commissions may add up quickly if you don’t purchase no-load shares.

What’s missing from Franklin Templeton’s portfolio?

Franklin Templeton has a broad range of sector-focused investments, but fund cost ratios are greater than those of other competitors, and commissions may be hefty if you purchase loaded shares. Franklin also doesn’t give individual investment advice, and the 403(b) plans it offers are only available in non-ERISA-compliant plans. This includes government personnel, such as those working in hospitals and schools, as well as religious organizations and 501(c)(3) philanthropies. You won’t be able to set up an ERISA-covered 403(b) plan directly with Franklin Templeton.

American Funds is another 403(b) provider to consider.

American Funds is the third biggest mutual fund business, ahead of Franklin Templeton, with over $1.5 trillion in assets under management. For major institutional investors, the firm provides more than 40 mutual funds and sub-advisory services. It’s one of the finest 403(b) businesses for organizations who wish to provide a modest number of diversified mutual funds while keeping members away from more specialised products.

What American Funds Can Provide

In 403(b) plans, American Funds offers a comprehensive portfolio of more than 50 cost-effective mutual funds. To meet your goals, these funds invest in a range of assets and use a number of investing techniques. They may be used alone or in combination as part of a well-balanced portfolio.

Options for Investing

Options for Investing available through American 403(b) plans include:

• Growth funds invest in equities in the hopes of profiting from price increase.
• Income funds invest in bonds in order to generate income.
• Money market mutual funds engage in short-term debt to offer high liquidity to investors.
• Balanced funds invest in a combination of equities and bonds to offer a mixed return.
• International funds should concentrate their investments on foreign assets in order to gain from the growth of foreign economies and currencies.
• As a target retirement date approaches, target date funds automatically rebalance between stocks and bonds.

Services Not Included

Although American Funds is a well-established and reputable mutual fund company with a wide array of Options for Investing suitable for 403(b) plans, the firm provides little else in the way of Services Not Included. It focuses on providing well-managed mutual funds rather than banking or brokerage services that might benefit employers.

Service to Customers

Historically, American Funds provides very little Service to Customers directly to clients because its marketing and Service to Customers are adviser-driven. Routine account maintenance issues can typically be handled over the phone, but more in-depth questions or individual investment advice are typically provided by independent financial advisers who are licensed to sell American Funds products.

Costs of a 403(b) plan with American Funds

The following are the usual expenses of an American Funds 403(b) plan:

• Expense ratio of mutual funds (1% to 1.5%): These fees cover fund management and trading costs. A charge for plan administration and a 0.25 percent to 0.75 percent fee paid to your financial advisor are also included.
• Recordkeeping cost ($750 per year plus $20 per participant): American Funds charges a recordkeeping fee of $750 per year plus $20 per participant paid by participants for your 403(b) plan.
• There is no price if American Funds takes over an existing 403(b) plan, but there is a $500 setup fee for new programs.

In addition to expenses related directly to Options for Investing within a 403(b), American Funds can also provide administrative and recordkeeping services, as needed, for a separate fee. Its less-expensive option, RecordKeeper Direct, starts at $750 per year plus $20 per participant. Under this plan, average fund expense ratios paid by plan participants are about 1.39% per year.

What’s Wrong With American Mutual Funds?

To set up a 403(b) plan with American Funds, it’s best to enlist a financial adviser to help you set up the plan and provide guidance. American Funds’ business is adviser-driven, so it doesn’t have offices around the country where you can get direct individual guidance. It also doesn’t provide much Service to Customers directly to clients.

Alternatives to a 403(b) Savings Plan

Only select NGOs are eligible for a 403(b). A 403(b) is unlikely to work for a small firm when it comes to setting up a retirement plan.

Alternatives to 403(b) plans for small businesses include:

Traditional 401(k) plans (k)

If your company has more than 10 to 12 workers, a 401(k) may be the best alternative. Employee deferrals (limit $19,000), employer matching (max $19,000), and discretionary employer profit-sharing ($18,000) are all allowed in 401(k) plans, allowing you to contribute up to $56,000 each year. Check out our post on the Best 401(k) Companies for additional information on 401(k) plans.

SIMPLE IRA

Because they’re less costly and simpler to manage, a SIMPLE IRA is sometimes referred to as a poor man’s 401(k). SIMPLE IRAs enable members to contribute up to $26,000 each year, which may be divided between employee salary deferrals (limited to $13,000) and employer matching (up to another $13,000).

Employers are obligated to match employee deferrals up to 3% in SIMPLE IRAs. You may lessen the match, but you must match at least 1% and no less than 3% in more than two years during the course of a five-year term.

401 (Safe Harbor) (k)

For-profit companies that want to structure 401(k) plans that make it easier to maximize contributions can do so by qualifying their 401(k) as a Safe Harbor plan. 401 (Safe Harbor) (k) plans have their own set of rules and requirements including generous matching requirements for employee salary deferrals.

In exchange for these generous matching programs, 401 (Safe Harbor) (k)s exempt themselves from nondiscrimination testing, making it easier for company owners and highly compensated employees to maximize their contributions even if rank-and-file employees don’t participate.

Even if you qualify for a 403(b), you may be qualified for other kinds of plans as well, so it’s vital to look into them.

Final Thoughts

If you run a nonprofit organization that qualifies for a 403(b) plan and want to set up a plan, the most important first step is to identify the right provider to benefit you and your employers. The best 403(b) companies vary so it’s important to consider Options for Investing, fee structures and the availability of one-on-one guidance.

Human Interest has a lot of expertise with 403(b) plans. Human Interest charges just $120 per month plus $4 per employee to establish a 403(b). Contact a professional now to begin saving up to $55,000 every year.

Human Interest is a great place to start.

The “vanguard 403b” is an investment company that offers a wide range of investments. The company has been around for over 30 years and is one of the best companies in the field.

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