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401(k) plans are a popular way for companies to help their employees save for retirement. If you’re looking to get started with your 401(k) plan, here’s our list of 10 best 401(k) companies in 2022.
401k is a retirement savings plan that allows employees to set aside pre-tax income for retirement. In order to be eligible for a 401(k), an employee must work at least 20 hours a week.
Through tax-free salary deferrals, matching, and profit-sharing, a 401(k) enables company owners and workers to save up to $57,000 each year. While all 401(k)s must adhere to IRS regulations, selecting the correct provider—particularly for a single 401(k)—is critical. We looked at more than two dozen 401(k) providers to come up with a list of the top ten.
Wells Fargo is the best 401(k) provider overall.
Wells Fargo is our top 401(k) provider because it has a solid reputation, a wide range of options, and a low price structure. Wells Fargo manages the 401(k) plan’s recordkeeping as a plan administrator (k). It also provides banking services, a variety of investing and trading options, and cash management. Clients may also use Wells Fargo for business financing and merchant services, keeping everything under one roof.
Options for Investing
For 401(k) customers, Wells Fargo offers a variety of in-house and outside investing alternatives, including:
- Mutual funds: Wells Fargo suggests a variety of mutual funds as 401(k) investing alternatives. Participants in 401(k) plans may choose from the company’s own mutual funds as well as funds from other sources.
- 401(k) ETFs (k) Customers may also invest in Wells Fargo or third-party ETFs, which are stock-like bundles of individual securities such as mutual funds.
- Equities: Wells Fargo allows you to actively trade both local and foreign stocks.
- Bonds: Participants may also trade specific debt issues via Wells Fargo.
- Wells Fargo offers a line of target-date funds that are meant to automatically change the underlying portfolio depending on a specified retirement date.
Plan Administration & Setup
Wells Fargo’s diverse business units can handle the 401(k) from conception through execution, as well as a long-term investment strategy. Wells Fargo may assist with the following in a 401(k) plan:
- Administration of the plan
- Management of funds
- Payroll
- Platform for trading
- Investing guidance
- Alternatives to public investment that aren’t available to the general public
Costs
The cost of a Wells Fargo 401(k) depends on the plan’s size and the number of members, as well as the investment alternatives available and the precise role(s) that Wells Fargo is playing in setup and administration.
Service to Customers
Wells Fargo provides customer support in a variety of ways. It features a robust online platform as well as retail banking locations around the nation where customers may get help. Furthermore, Wells Fargo has partnered with independent financial advisors around the nation who, although not affiliated with the firm, may assist consumers in navigating the company’s numerous options, obtaining answers to queries, and initiating or administering a plan.
The Best All-Online 401(k) Provider is ShareBuilder 401k.
For individuals who are looking for a comprehensive online experience, ShareBuilder 401k stands out. It focuses on providing low-cost, best-in-class 401(k) programs to self-employed people and small enterprises. Small company owners may set up a 401k account totally online for a fixed charge and begin investing right away with ShareBuilder 401k.
Options for Investing
ShareBuilder 401k provides a variety of managed portfolios, including:
- Index ETFs: ShareBuilder 401k offers around a dozen low-cost index ETFs with annual expense ratios of 0.39 percent or less to plan members.
- Participants may choose from five alternative model portfolios, each of which includes mutual funds, exchange-traded funds (ETFs), real estate investment trusts (REITs), and other assets.
Plan Administration & Setup
ShareBuilder 401k focuses on enterprises with six to ten workers and provides 401(k) plans with as little as one member. This is appropriate for a company that anticipates rapid growth. The following are the areas where ShareBuilder 401k focuses:
- Administration of the plan
- Platform for investment
Costs
ShareBuilder 401k provides flat-fee plans that vary depending on the kind of plan you choose and the number of members. The fees are lower when there are fewer participants.
Service to Customers
Even while ShareBuilder 401k is meant to get you up and running with a completely simplified online experience, customer service is provided by a team of specialists. Queries concerning the online platform, investment questions, and administrative difficulties are all addressed as part of the service. The group is not only accessible but also responsive.
Merrill Edge caters to high-net-worth individuals
Merrill Edge is a Merrill Lynch online brokerage subsidiary that is owned by Bank of America. Merrill Lynch seeks to engage with high-net-worth clients who are interested in long-term planning rather than simply transactions. Merrill Lynch requires a minimum investment of $250,000 to establish a relationship. Smaller accounts can be opened since internet brokerages have fewer administration requirements.
Small company owners may use Merrill Edge to have access to all Bank of America services and resources, such as business banking, financing, and wealth management. Merrill Edge is a stand-alone entity that provides customers with a simple, cost-effective 401(k) solution with a wide range of investment choices, simplified service, and a simple fee structure.
Options for Investing
Merrill Edge provides customers with a variety of investment opportunities, many of which come from the prestigious Merrill Lynch parent company, such as:
- Merrill generally includes a variety of mutual fund investing alternatives for members in its 401(k) plans. Merrill Edge provides Merrill Lynch as well as other providers’ mutual funds.
- ETFs: Merrill Edge 401(k)s with brokerage options, like those offered by other providers, enable you to invest in ETFs that trade like stocks. ETFs are available from Merrill Lynch and other providers.
- Stocks: Participants in a 401(k) with a brokerage option may actively invest in specific stocks.
- Bonds: Some investors may use their 401(k)s to purchase and sell specific debt issues.
- Merrill Edge does not provide its own target-date funds, but it does offer funds from Merrill Lynch and other providers that automatically modify portfolio balances when a target retirement date approaches.
Plan Administration & Setup
While both Bank of America and Merrill Edge provides a variety of financial services, Merrill Edge primarily serves as a cheap brokerage and trading platform. Merrill handles a variety of services as a 401(k) provider, including:
- Administration of the plan
- Recordkeeping
- Trading
- Reporting on accounts
While Merrill does not provide payroll services, it does make it simple to organize employee contributions to your plan by allowing you to set up automatic contributions as well as cash sweeps for employer matching and profit sharing.
Costs
Merrill Edge is not the cheapest 401(k) provider, but it is reasonably priced. Even more importantly, it is without a doubt one of the most cost-effective suppliers.
Service to Customers
While Merrill Edge is primarily an online service, its parent businesses have locations all over the globe and provide in-person and phone assistance. Branches of Merrill Lynch and Bank of America may be found in almost every community in the United States. In addition to various additional financial services, you may hire professional specialists from one of these locations to settle any concerns and give personalized counseling.
Guideline: Best for 401(k) Regulatory Compliance Assistance
Guideline is one of the top 401(k) investing businesses because it offers transparency and simplicity, and it delivers on both fronts. Companies may select between two plans, both of which include a complete range of services—including regulatory compliance assistance—for a monthly flat price plus a set per-employee cost. Guideline makes operating a 401(k) plan less scary for company owners by simplifying the expense structure (k).
Options for Investing
Employees have two investment alternatives with Guideline, ensuring that any 401(k) plan member may select assets that meet their requirements. With Guideline, you may choose between two investing options:
- Index funds: Guideline has over 40 index funds to pick from, including Vanguard and other low-cost providers. A blended average of 0.06 percent is charged by funds in Guideline’s investing portfolio.
- Guideline works with workers to determine their risk tolerance and create a suggested portfolio of funds that are well-suited to their retirement aspirations. Guideline does not charge any fees for managed investments.
Plan Administration & Setup
Guideline provides two plans: an entry-level Startup Plan and a more expensive but more comprehensive Prime Plan. Both provide a comprehensive set of features for enterprises, including:
- Assistance with regulatory compliance
- Account management capabilities that are robust
Costs
Both businesses and workers will find Guideline to be one of the most cost-effective 401(k) providers. Employers may choose between two distinct plans based on their requirements, and pricing is clear.
Neither plan has any investment management or custodian fees, and both provide low-expense-ratio mutual funds. Both plans include a $250 termination cost as well as fees for particular services that workers may need, such as a $100 fee for employees who apply for loans and a $75 yearly loan maintenance fee.
Service to Customers
Guideline has won awards for its one-of-a-kind software that makes 401(k) establishment and maintenance easier for organizations. It boasts full payroll integration and provides plan members with live, US-based service through phone or chat. Your firm can get your 401(k) plan up and running fast by starting with a free 30-minute 401(k) consultation. Participants in the Prime package also get priority assistance from a personal account manager.
Human Interest: The Easiest Low-Cost 401(k) Provider to Use
Human Interest was based on the conviction that many 401(k) firms impose exorbitant or concealed fees. It is a disruptor in the market since it is an investing platform that can run your 401(k) plan and is ideal for small company owners who want to save time and money by using an online provider.
Human Interest, in comparison to other 401(k) firms, strives to keep administrative expenses low and uses flat administrative fees so company owners know what to anticipate. While it does not provide payroll services, it integrates nicely with most systems and delivers a basic set of functions quickly.
Options for Investing
Human Interest, unlike some other providers, offers a restricted number of investment possibilities. Nonetheless, the funds it provides are among the most popular forms of retirement investment vehicles, with plenty of potentials for members to increase their holdings.
Among the Human Interest investing choices are:
- Mutual funds: Human Interest offers a wide range of well-diversified mutual funds from trustworthy firms to 401(k) members.
- 401(k) funds with a target date to help them alter their debt-to-equity ratios as they get closer to retirement. Target date funds, although potentially helpful, may come with extra expenses.
Plan Administration & Setup
Human Interest offers a core set of services that it delivers quickly and effectively. It works nicely with any outside suppliers that a small company uses for other services, such as payroll. Human Interest’s main 401(k) services are as follows:
- Plan creation and management
- Recordkeeping
- Processing of trade
- Advice on various investing choices
- Employee resources and financial literacy classes
Costs
Human Interest publishes a thorough list of its pricing on its website and prides itself on being exceptionally cost-effective in its services. Its services are available for a monthly flat cost to assist small company owners in properly budgeting their 401(k) assets.
Service to Customers
Human Interest is nearly completely online, with no physical locations where customers may seek advice or a menu of extra services that many other suppliers give. Despite the lack of physical locations, each 401(k) customer is assigned a personal account manager, and the organization collaborates with different kinds of providers to make administration as simple as possible for business owners and workers. Human Interest even helps 401(k) plan members who wish to take out a loan against their retirement savings.
Vanguard is the best mutual fund 401(k) provider
Vanguard is the world’s biggest mutual fund firm, with over $4.5 trillion in assets under management. Depending on the plan’s design, the business provides professionally managed mutual funds and ETFs that might be employed in a 401(k) plan. Vanguard is the best mutual fund provider for every 401(k) plan.
Vanguard’s function in the 401(k) industry is limited to that of a pure money manager. It doesn’t handle plan administration, payroll, or banking, but it’s well-known as a money manager and a fantastic source of 401(k) investment possibilities. Vanguard’s funds cover a wide range of topics—domestic vs. foreign, equities vs. bonds, aggressive vs. conservative—and provide excellent diversification at a cheap cost.
Options for Investing
In the 401(k) business, Vanguard’s major job is to provide well-managed investment alternatives, such as:
- Vanguard has over 100 mutual funds, all of which are well-managed and among the most affordable in the market. Most 401(k) plan administrators provide them to 401(k) members.
- Vanguard also provides a range of ETFs that are well-diversified and low-cost for those businesses that create a 401(k) to include a brokerage option.
- Vanguard provides a variety of target-date funds that are intended to automatically alter the underlying portfolio when a specified retirement date approaches. Vanguard’s target-date funds are among the most cost-effective in the mutual fund market, unlike other providers who prefer to overlay costs for target-date products.
Plan Administration & Setup
Vanguard is not a plan administrator on its own. When using an administrator platform, Vanguard makes it reasonably simple to integrate with banks and payroll service providers. When it comes to technology and seamless integration, however, it, like other mutual fund organizations, has a lot of potential for development.
Costs
In the 401(k) area, Vanguard’s expenditures are limited to fund charges represented as a percentage of total assets invested. These fees rise in tandem with the amount invested and are automatically withdrawn from participant accounts.
Service to Customers
Vanguard funds are usually held by other 401(k) plans via an intermediary, such as a plan administrator. This implies Vanguard does not actively coordinate customer assistance. Instead, a 401(k) administrator is usually in charge of client service.
Paychex: The Best Payroll Provider for Simple 401(k) Management
Paychex is well known for its payroll services, but it’s also a great 401(k) plan administrator. It also offers small and medium firms outsourced benefits, business financing, and other services (SMBs). Paychex is a wonderful option for small business owners that wish to outsource payroll processing to a firm that can work with 401(k) administrators and other service providers effortlessly.
Paychex is the most popular payroll service because of its important recordkeeping functions. Paychex, furthermore, provides seamless connectivity with 401(k) third-party administrators (TPAs), making plan administration considerably simpler for small company owners.
Options for Investing
Paychex does not provide investment alternatives as a payroll service. Instead, its clients may pick from any investment alternatives offered by the plan administrator. Based on the administrator selected, this opens the door to an infinite number of investment options.
Plan Administration & Setup
Paychex is being featured because of how simple it is to work with 401(k) plan administrators. This allows small company owners a lot of freedom in terms of selecting the correct administrator, trading platform, and investment possibilities. Paychex’s participation in the process is limited, yet it is efficient and effective. It will, for example, make pre-tax or post-tax employee contributions, as well as any employer match, easier.
Cost
Paychex’s charges are limited to payroll services if you want to utilize them since it does not provide plan administration or investment alternatives. Its billing system is based on the number of workers and pays periods each year, with the number of employees and annual periods increasing as the number of employees and annual periods grows. Processing employee W-2s and other tax forms incur extra fees, and you must contact them directly for a free quotation.
Service to Customers
While Paychex is almost completely focused on payroll and human resources (HR) solutions, it has over 100 locations around the nation where small company owners may seek help. The firm excels at making it simple for business owners to collaborate with 401(k) plan administrators to set up a plan and make contributions.
Fidelity is the best provider of target-date funds.
Fidelity Investments is a diversified financial services firm that provides mutual funds, securities brokerage, business, and personal banking, as well as credit cards and business loans. Because of the 13 Freedom Funds plans offered by Fidelity, it is the best target-date fund provider for 401(k)s.
Small company owners may take advantage of 401(k) plan administration and recordkeeping, a comprehensive trading platform, financial consulting services, as well as personal and business banking. Many of these services are supplied by separate business divisions, but Fidelity as a full-service corporation can give them all.
Options for Investing
Fidelity offers 401(k) customers a variety of in-house and outside investing alternatives, including:
- Mutual funds: In addition to its own mutual funds, Fidelity’s trading platform allows 401(k) members to access funds from other providers.
- ETFs: Participants in a 401(k) plan with a brokerage option may trade in ETFs from Fidelity and other providers.
- Stocks: If their plan includes a brokerage option, employees may actively acquire individual shares in firms.
- Individual debt issuance from firms and nations is also available to plan members in some plans.
- Target date funds: Fidelity’s Freedom Funds line includes a variety of target-date funds with retirement dates ranging from 2025 to 2065. As the intended retirement date approaches, the funds adjust automatically.
Plan Administration & Setup
Fidelity, as a full-service financial business, provides a wide range of financial services. Fidelity, in addition to its mutual funds, trading platform, and banking services, provides a variety of 401(k)-specific services, including:
- Administration of the plan
- Recordkeeping
- Trading
- Reporting on accounts
Service to Customers
Customer service is very important to Fidelity. It offers offices in a variety of locations around the location where customers may obtain one-on-one help or work with a specialized consultant. Furthermore, their phone assistance is among the finest in the business.
Charles Schwab is the best low-to-no-fee 401(k) provider.
Charles Schwab provides a full-service 401(k) plan tailored to your business as well as the ability to add investment advisory services to an existing 401(k) (k). Charles Schwab has a broker-dealer and a banking business, allowing it to provide a complete range of financial services. It also provides plan members with its own proprietary mutual funds and ETFs, as well as other investment opportunities.
Charles Schwab receives our vote for the top low-to-no-fee supplier because of its zero-dollar trading expenses. Owners of 401(k) plans who wish to trade stocks or bonds in their accounts will find this quite appealing.
Options for Investing
For retirement plan members, Charles Schwab offers a variety of investment alternatives, including:
- Schwab provides hundreds of mutual funds that have no loading or transaction costs. There are more than 50 Schwab funds that focus on certain investing goals.
- ETFs: Investors may use Schwab ETF OneSource to identify ETFs that they can buy in their 401(k) accounts without incurring commission fees.
- Equities: Business owners may add a brokerage option to their plans, allowing plan members to buy individual shares of the US and foreign stocks.
- Fixed income investments: If clients choose conservative investments or are approaching retirement age, Schwab 401(k) plans may give them the option of investing in bonds or annuities.
Managed accounts, offered by Charles Schwab, allow plan members to get tailored asset allocation recommendations based on their contribution rate, age, account balance, income, employer contribution formulae, and other pertinent data.
Plan Administration & Setup
When you set up a Schwab 401(k) plan for your company, you’ll receive a customized plan that’s tailored to your company’s and workers’ requirements. Schwab’s main 401(k) services are as follows:
- Plan creation and management
- ERISA (Employee Retirement Income Security Act of 1974) compliance consultation
- Analytical planning
Costs
With no administration or transaction fees, Charles Schwab solo 401(k) charges are among the lowest affordable in the market. The mutual fund fees are the sole expenses that participants may expect to pay.
Service to Customers
Schwab provides firms with a variety of communication options, including the ability to get help in person, through online chat, or over the phone. There’s also a simple mobile app that offers you access to Schwab’s vast collection of webcasts, articles, and videos.
Employee Fiduciary: The Most Personalized 401(k) Provider
Employee Fiduciary is a 401(k) plan administrator that works with a wide range of small companies. Every employer that joins Employee Fiduciary’s 401(k) plan will have a plan design consultation to ensure that the plan matches the company’s objectives and budget. Employee Fiduciary’s plan conversion services will help companies with current 401(k) plans as they transition to this new supplier.
Options for Investing
Employee Fiduciary is one of the 401(k) organizations that offers an almost infinite amount of mutual fund selections. The corporation, on the other hand, does not provide stocks or bonds as a form of investment.
Fiduciary 401(k) investing choices for employees include:
- Choose from 377 fund families with 30,000 share classes for NSCC-tradable mutual funds.
- Vanguard funds, index funds, and ETFs: The option to integrate self-directed brokerage accounts from TD Ameritrade gives Employee Fiduciary plans even more financial freedom.
Plan Administration & Setup
From the first day, Employee Fiduciary provides individual assistance. You’ll get help with plan design, training, and support. Employee Fiduciary’s main 401(k) services are as follows:
- Plan creation and management
- Training and assistance
- Regulatory compliance assistance
- Services for bookkeeping and recordkeeping
Employee 401(k) Fiduciary Costs
One of Employee Fiduciary’s biggest benefits is its transparent price. The 401(k) administrator provides a comprehensive breakdown of its initial, yearly, and recurring costs.
One of the good features of this provider is the Employee Fiduciary’s online tool for calculating the entire cost of forming and running a 401(k) plan with this plan administrator by answering a few basic questions.
Service to Customers
Every firm with a 401(k) plan is allocated a dedicated relationship manager with Employee Fiduciary. Many other 401(k) investing firms only provide this to businesses with premium accounts. The company’s 800 number may be used to contact customer service. Employee Fiduciary also has a specialized 401(k) support center with a wealth of free educational tools, including a 401(k) provider shopping checklist.
How Did We Pick the Best 401(k) Providers?
When creating a new solo 401(k), our guidance evaluates providers based on certain characteristics that we know are crucial to investors and company owners (k). Traditional banks, HR firms, mutual fund firms, payroll providers, and third-party administrators were all included in the mix. We didn’t rate them primarily on price since those with greater prices generally offer better customer service and retirement planning options.
Here are the factors we used to choose the top 401(k) provider after looking at a variety of options:
- Participation in the procedure
- Integration ease
- Reputation
- Investing possibilities
- Costs of administration
- Customer service by employers and employees
Alternatives to a 401(k)
For every company owner, a 401(k) is not the ideal solution. Other retirement savings vehicles, such as a simplified employee pension (SEP) or a savings incentive match plan for employees (SIMPLE) IRA, may be a better fit depending on how much you expect to invest and how much time you want to spend operating the plan. These solutions may be more cost-effective.
SEP IRAs
If you’re self-employed or operate a small company with fewer than three to five workers, the SEP IRA may be a good option. If you earn more than $75,000 per year, a SEP IRA may save you money since you can contribute up to 25% of your salary, or $57,000, without the additional fees that come with a 401(k).
The main distinction with SEP IRAs is that employers must cover all contributions for both themselves and their workers. There are no salary deferrals or matching contributions for employees. This might be more costly than a 401(k) for firms with more than three to five workers, but it can be a terrific alternative for a solo entrepreneur.
IRAS
A SIMPLE IRA is much less complicated than a 401(k). It’s even been dubbed the “poor man’s 401(k)” since it provides many of the same advantages to small firms with a few workers while avoiding the costs of operating a 401(k).
SIMPLE IRA contributions, like 401(k) contributions, are made up of employee deferrals and matching contributions. A SIMPLE IRA, on the other hand, has reduced contribution limitations, with yearly contributions capped at $13,500 and employer matching contributions subject to rigorous criteria.
Conclusion
While not all 401(k) providers are designed to fulfill the requirements of every sort of customer, the majority of them do. Choose a service provider that makes it simple to set up and maintain your account. You want to strike a balance between the price and the investing possibilities and guidance you’ve gotten.
