Choosing the Right 401k Service Provider

As a company owner, it is essential that you choose the right 401k service provider for your employees. Unlike similar plans, such as health insurance, there are hundreds of different 401k service providers, which can make this decision a bit overwhelming. You need to know what to look for in a top 401k provider to better sort through your options and find the right fit for your company.

In this article, we will discuss the basics of choosing the right 401k service provider and exactly how you can do this. We will also discuss the best 401k companies with an established reputation and credibility.

Top 401k Providers: Choosing the Right 401k Service Provider

Before you begin the process of looking into the most popular 401k companies, you first need to evaluate your company's needs. For instance, there are some good low cost providers for small companies with basic needs, but low cost providers are not always the best fit for larger and growing companies whose needs are more complex. You should also consider whether or not you would be willing to cover annual fees yourself in order to make them more cost-sensitive for your employees.

Best 401k Companies Vs. Popular 401k Companies

There are an endless amount of options when it comes to choosing the right 401k service provider for your company. Although it is beneficial to have the ability to pick and choose, it can also make this decision very difficult.

Sticking with a provider that is well known and has already established credibility is often recommended. This can help you avoid 401k fraud or scams as well as high or hidden costs.

Here are some of the most popular 401k providers to look into for both small and large companies:

  • Voya

  • ADP

  • Fidelity 

  • Principal

  • Ascensus

  • American Funds

  • John Hancock

  • Empower

Before making a decision, you should consider speaking with a financial advisor regarding your options. At Paul D. Sippil & Associates, we can look at your 401K service needs and help you find the best 401k provider that offers what you are looking for. We can also help you break down the types of 401k plans you want to provide for your employees, which can influence your decision regarding a service provider.

At Paul D. Sippil & Associates, we can help you evaluate your 401k plan needs so that you can find the best 401k provider that checks off all of the boxes. We can help with analyzing fee structures, investment options, payroll tools, technology, service, and more.

Here are some of the main factors to consider when looking at the top 401k providers.

Cost

One of the more complex aspects of choosing a 401k provider  is picking something that is affordable. Unfortunately, many companies do not have sufficient transparency when it comes to features like fee disclosure, and the cost may be disproportionate to the services provided. To understand whether or not the cost is fair, you need to consider the type of services and features that are provided, such as:

  • Administration

  • Record keeping

  • Service quality

  • Technological capabilities

Fees for these services and features, however small they might seem, can add up significantly, so you want to take every aspect of the cost into consideration before coming to a decision.

Service Quality

An unfortunate industry-wide problem when it comes to 401k providers is finding high-quality customer service and support. 401k plans can be quite complex, and you may need to contact support to better understand the plans and associated fees.

Choosing a 401k service provider that assigns an experienced personal representative to your account who doesn’t routinely pass you off to a customer service center is recommended. This personal representative will be the one to answer any questions directly, which will significantly increase the service quality.

You should also consider if the 401k provider has additional resources such as Spanish Enrollment materials and Spanish speaking employees if applicable. 

Technology

As an employer, you will be periodically responsible for managing things such as administering loans, administrating in-service withdrawals, sending out notices, and monitoring participant eligibility. For this reason, it is beneficial to find a 401k provider that uses up-to-date technology that can help you automate many of these tasks.

Having up-to-date technology can also improve the experience of your employees by giving them online tools to simplify the 401k plan process.

Additionally, you could hire a 3(16) administration fiduciary to further automate administrative and compliance tasks such as handling loans and preparing the 5500 form.


Compatibility With Payroll

Even though payroll compatibility may not seem like a top priority, this can make a big difference when you are choosing the right 401k service provider. You want a seamless transition that will require as little time and effort as possible. Because of this, it is beneficial to find a 401k provider that offers a 360 payroll integration, which can also help the payroll system to update automatically with new changes.

Investment Options

To give your employees the best 401k plan options, you need to choose the right 401k service provider that does not place too many restrictions on the investment options.. Most providers will offer similar investment options, but there may be certain types of restrictions, such as restrictions on exchange-traded funds or requirements to offer a provider’s proprietary funds that may not be appealing.  

A common option is self-directed brokerage accounts that give your employees unlimited investment options.  However, some providers will place a limit on how much can be invested in this account. 

Get the Right 401K Plan With Paul D. Sippil & Associates 401K Consulting

Because many 401k providers have high costs or do not provide sufficient transparency, it is essential that you choose the right 401k service provider. There are many options available, but they may not all fit your needs or provide the customer service, technology, investment options, or affordability that you and your employees want. By thoroughly examining all of these areas, you can choose the right provider for your company.

Contact Paul D. Sippil & Associates today for assistance with choosing the right 401k service provider and presenting your 401k plans to your employees.