It can be difficult to find the right retirement plan for yourself -- and choosing a solid 401k plan for your small company is an even greater challenge. Owners of small businesses are busy, and it is unlikely you have expertise in this area. To help you figure out the best plan for your company, learn about some small-business friendly options.
Following are 10 of the best 401k companies and plans for small businesses: nine are specific 401k providers, and the tenth is an approach to building a plan. Understand these 401k options so you can decide which plan best meets your company's situation and needs.
Features of a Good 401k Plan
What is a 401k plan? It's a tax-deferred retirement vehicle that allows you to accumulate funds during your working years. You can use a 401k plan to build a decent-sized nest egg for your golden years.
For 2016, 401k contribution limits are $18,000, with a $6,000 catch-up contribution for workers ages 50 and older. These 401k limits change from year to year, so keep an eye on them, as the maximum 401k contribution allowed is likely to increase.
Some features that an owner of a small business might look for in searching for a good 401k plan include:
Robust services and features that make things easier for participants, including website access and the availability of knowledgeable call center staffers who can field questions
A provider that makes things easier for the plan sponsor in terms of administration
A solid, low-cost investment lineup
Cutting-edge technology
Overall, employers want to offer a 401k plan that is truly a benefit to their employees, and one that is perceived as such. A solid 401k plan can aid in attracting and retaining top-notch employees, whereas a bad one can do the opposite.
If you discover more about the best 401k options, you can steer clear of the many lousy small business 401k plans out there. With that in mind, here are some of the best 401k providers for small businesses.
Read: 5 Signs of a Sub-Par 401k
BB&T Retirement and Institutional Services
BB&T was among 11 institutions to be awarded top honors in the 2015 Plansponsor magazine annual defined contribution survey. Defined contribution plan sponsors representing employers with plan assets of between $5 million and $25 million ranked BB&T first overall. Meanwhile, sponsors representing employers with plan assets of less than $5 million ranked them third.
Overall, BB&T received 42 best-in-class awards in the survey. According to the company's website, BB&T offers different levels of service for:
Plans with assets of $3 million or less
Plans with between $3 million to $25 million
Plans larger than $25 million
BB&T offers many services for sponsors of plans with $3 million or less in assets. These include a service team dedicated to working on issues that arise and investment monitoring. BB&T also offers:
Plan design consulting services
Compliance webcasts
Trustee services and fiduciary support
Participants in BB&T plans with $3 million or less in assets have access to investment advice through Morningstar Retirement Manager. Other features include:
Automatic enrollment and deferral increase program
Webinar meetings, including instant access to the "Your Retirement Journey" presentation intended to help employees prepare for retirement
Employee Fiduciary
Employee Fiduciary offers access to a wide array of mutual fund choices with reasonable fees. Prices are low for both establishing a new plan or transferring an existing plan. Plan set-up fees are $500 for new plans and $1,000 for conversions, such as a 401k rollover.
Annual plan administration fees include:
A base fee of $1,500 per year that covers up to 30 eligible employees -- each additional employee is $30 per year
An asset fee of 0.08 percent of plan assets per year
Employee Fiduciary's 401k plan setup and conversion services include preparing the plan document, setting up participant and trust accounts, and providing website and payroll upload training.
The company offers access to a wide range of mutual funds and exchange-traded funds from Vanguard and other low-cost providers. It also offers access to a self-directed brokerage option via TD Ameritrade.
One America
One America is an insurance company that has acquired several retirement plan providers. The company's inclusion on this list is due to the acquisition of BMO Retirement Services, a firm that has consistently received top rankings for plans with assets between $5 million and $25 million.
One America was also ranked in the top five in its asset range in the 2015 Plansponsor survey. BMO Retirement Services acquired M&I Retirement Plan Services several years ago, and M&I had also consistently received top rankings in the Plansponsor survey.
BMO retirement plan services include web-based administration services, plan design and compliance services, and tools to help sponsors track investment performance. BMO also offers employee communication and education assistance.
Read: 27 Steps to Maximize Your 401k in 2016
MBM Advisors
MBM Advisors received the top ranking among all plan providers with less than $5 million in assets in the 2015 Plansponsor survey. MBM recently became part of another firm, BOK Financial Asset Management. BOK is also an investment advisor.
MBM received 32 service awards in the Plansponsor survey. BOK site services available in connection with company retirement plans include:
Investment advice
Participant education
Record-keeping and compliance
Plan design consulting
ShareBuilder 401k
The next three providers are good options for smaller companies that want a hands-off approach.
ShareBuilder is a unit of Capital One and focuses on small- to mid-sized 401k plans. ShareBuilder's turnkey approach uses low-cost index ETFs exclusively, and the company's efforts are geared to smaller companies.
ShareBuilder provides an investment policy statement for each plan, to help ensure that plan sponsors meet their fiduciary obligations. The company also acts as an ERISA 3(38) advisor to plan sponsor clients, so sponsors delegate most of the functions involved in running a plan to the advisor.
In turn, the advisor has discretion in hiring service providers and choosing investments offered by the plan. The plan sponsor selects and monitors the 3(38) fiduciary, but this arrangement allows the sponsor to offload some of the fiduciary liability to this advisor.
ShareBuilder can be a solid option for a company that wants minimal involvement in the process. The company offers several versions of its service, including:
The Simplified 401k: This safe harbor plan offers a pricing matrix for plans based on the number of employees and the amount of assets in the plan.
The Customized 401k: Features like a vesting schedule and matching contributions can be tailored to the needs of your company
A profit-sharing option is available for organizations with unique employee needs, such as professional partnerships like law firms or medical practices. More sophisticated plan designs are available, and ShareBuilder will assign a consultant to help in the plan design process.
Ubiquity
Ubiquity offers a variety of low-cost, easy-to-implement 401k plan options for employers. The company -- which was formerly called The Online 401(k) -- focuses on smaller plans. Its service is largely automated.
Ubiquity's Express 401k plan supports plan loan and hardship withdrawals. A third-party investment advisor selects and monitors investments, and online tools and phone support are available.
Vanguard
Low-cost fund provider Vanguard has also entered the small plan market. According to a Bloomberg report, the price of Vanguard's plans can vary, but a plan with $1 million in assets and 25 participants might pay about 0.5 percent a year in administrative fees.
Vanguard's small company plans offer several features and benefits:
They offer both a traditional and Roth 401k option in the small plan market.
They are available to any business with one or more employees.
They offer access to Vanguard's low-cost menu of mutual funds, as well as some 10,000 non-Vanguard products. In addition, they can accommodate company stock and a brokerage option for participants.
Perhaps Vanguard's most attractive feature is the low-cost mutual funds and ETFs it offers.
T. Rowe Price
T. Rowe Price offers small business 401k plans that apply to employers with fewer than 1,000 employees. Plan participants have 24/7 access to account information and plan features and have the ability to conduct account transactions.
Other features of T. Rowe Price 401k plans include a plan sponsor resource center, employee communication support and materials, and a participant website. Plans have access to more than 90 no-load mutual funds, and more than 5,400 nonproprietary funds. There is also a self-directed brokerage option.
Read: 7 Retirement Planning Tips to Help You Fund Your Golden Years
Fidelity
According to Reuters, Fidelity had more than $94 billion in smaller company 401k plan assets as of 2014, far outstripping fellow mutual fund company giants Vanguard and T. Rowe Price.
Fidelity small-company plans are designed for public and private companies with 20 or more employees. Fees vary by plan. Features include online access and a wide range of mutual fund options, including funds outside the Fidelity fund family.
Plans also come with employer matching contribution and participant loan features. Fidelity offers tools and resources to help in choosing, administering and measuring the 401k plan.
Unbundled -- Build Your Own
One of the best 401k plans for a small business is to hire a trusted financial advisor or benefits firm to help your company build an unbundled 401k plan. The lead consultant will help you build a group of providers that will include:
A custodian -- the firm that holds the plan's assets
A record-keeper
A third-party administrator, who does the plan and participant level accounting
A financial advisor who can help you select and monitor the plan's investments
The advantage here is that you can pick and choose the service providers that work best. Think of it as a "best in breed" approach.
It is important to have a trusted lead advisor to guide you through the process. Often this is the plan's financial advisor. It is also important to ensure that your advisor is independent and answers only to you, the plan sponsor. This means you want to avoid advisors who are paid to suggest certain mutual funds or other service providers.
A 401k plan should not be an afterthought for your small company. A top-quality plan can be a good way to attract and retain top talent, and it is also the retirement vehicle that you will use to fund your own retirement. Yes, it is your employees' plan, but you also want to think of it as "my 401k plan."
The right choice is also important because courts have upheld the fiduciary duties that plan sponsors owe to their employees. So choosing a plan via your golfing buddy or your brother-in-law might not cut it in today's environment. Figure out how much you need for retirement -- a 401k calculator might help. Also, think about your employees' needs. Then, get to work and choose a plan.
This article originally appeared on GOBankingRates.com: What Are the Best 401k Providers for Small Businesses?