Best 401k plans for small Business

At long last, you can offer employees plans that matches the big guys in efficiency. What took so long?

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Used to be, giving your employees a 401(k) retirement investment plan was one of those good deeds that never went unpunished. While corporate giants have had decent 401(k) plans for years, small business 401(k)s always came larded with stiff fees and sales charges. Generally, it was your employees who paid, not you, although the fees were so well disguised that your employees were usually in the dark about how much they were being fleeced. Well, the lights are about to be switched on: As you may know, next year new 401(k) fee disclosure regulations go into effect, and your employees will see what they’re on the hook for. You don’t want to be the one blamed for the gouging.

That’s why I’m heartened that two of the financial industry’s most efficient providers, Employee Fiduciary Corporation and Vanguard, have entered the market for small business 401(k)s. Finally!

Why costs matter

Now, I have no reason to shill for either company. I’m a personal financial planner—I don’t sell 401(k)s or any other service to businesses. But I spent most of my professional life working in the CFO’s office of large corporations, where I helped put big 401(k)s in place. I made it a point for our plans to offer low-cost funds because I understood how the accumulation of fees over many years could erode the growth of employees’ savings.

When I left the corporate world to become the CFO for several venture-capital backed startups, I was distressed to find that small businesses didn’t have the same low-cost options. Plenty of 401(k) providers offered plans that cost owners virtually nothing, but they imposed fees upwards of two percent a year on the employees. (Consider what a 2.5% annual fee does to a fund’s return; at a time, like now, when the 10-year Treasury bond yields just 2.3%, your employees are guaranteed to lose money on their safe investments.) To help my clients do right by their workers, all I could do was search for the least bad option.

Now, as an independent financial planner, I deal directly with individuals who have their life savings in expensive small business 401(k)s like the ones I helped set up. I tell them to roll the 401(k) over to an IRA as soon as they leave their employer.

Finally – two solutions

Then, several months ago, I discovered Employee Fiduciary Corp. This 401(k) administrator offers only Vanguard funds (which invariably have among the lowest operating costs in their category), and its administrative fees are rock bottom. Record keeping and administrative fees were only $1, 500 annually for plans with under $1 million and 0.06% of assets for plans with more. There is also a one-time startup fee of $500 for a new plan and $1, 000 to modify an existing plan. In my personal blog, I called this the best small biz 401(k) provider.

Just a few weeks ago, Vanguard launched its own new 401(k) plan for small businesses. Vanguard, which is mainly a money management and mutual fund firm, is partnering with Ascensus as record keeper and administrator. Vanguard spokesperson Linda Wolohan estimated that fees would be about 0.32 percent annually for a $5 million plan. While more expensive than the Employee Fiduciary Corp option, it’s likely that this includes more services.


2007-01-12 22:39:11 by protectyourrights

Business Lawyer Referral

I don't know if this information will be helpful, but hopefully I can help save you some money and get your questions answered. I currently provide businesses with legal protection plans which include free unlimited consultations and referrals to lawyers on specific matters included in the cost of a business membership. A small business plan is $69 a month, and would be a great option for those needing immediate assistance. Our program includes unlimited consultations, letters written on your behalf and then a 25% discount should further matters require you to go further. Also, although the plan is invaluable there is no contract and if you have employees you can provide the family version to your employees as a benefit that they pay for directly

2008-05-01 18:29:06 by eljeezy

Plants, good points abt the streetcar thing

I posted earlier. you nailed the theory that city council and the mayor has been touting, and it seems like it'd be a good idea. the problem is that once the property values go up (another proposed 'benefit'), building owners will price out the small businesses renting from them in hopes that they'd vacate the building and make room for a larger chain that'd be able to 'whiten' the storefronts. then, when the locals rebel (as they regularly do against chain sub shops, for instance), the chains have no bones in letting the branch fail, then the storefront goes vacant again and the rent is too high for smaller businesses

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