Ubiquity 401(k) Plan Review: An Option For Small Businesses And The Self Employed

When you’re first establishing yourself as an independent adult, taking on extra work (side hustles) can make a huge difference in paying off debt and starting your investment journey.

Often, your day job salary will grow fast enough that maintaining side hustles isn’t always necessary.

However, sometimes, your side hustle income grows so fast that transitioning to self-employment or entrepreneurship makes sense.

But before you make the transition, you have to consider how you’re going to cover everything from health and disability insurance to your 401(k) plan. Once you start adding employees to the mix, the decisions become even more important.

If you’ve started a small business (even a sole proprietorship), it might be time for you to check out Ubiquity, which is a company that specializes in low-cost 401(k) management. They make it cheap and easy for sole proprietors and small business owners to set up 401(k) accounts for themselves and their employees.

Is Ubiquity the right company to help with your company’s retirement needs? This review will help you decide.

Ubiquity is a 401(k) plan manager for sole proprietors — and small businesses with up to 100 employees. It allows business owners to create a 401(k) offering for themselves and their employees.

Ubiquity gives owners the option to choose from 20,000 mutual fund options. It also allows owners to choose from preselected options. Ubiquity acts as a fiduciary, meaning its plan recommendations are in the best interest of the business owner and the company’s employees.

In addition to creating plans, Ubiquity can help business owners optimize the plans for tax efficiency (including creating “safe harbor” 401(k) plans that allow highly compensated individuals to contribute to the plan).

Finally, for a small additional fee, Ubiquity will handle the processing of IRS documentation like a From 5500 if your plan assets exceed $250,000, or a 1099-R if you make a withdraw from your plan.

Unlike most 401(k) management companies, Ubiquity charges a flat monthly fee every month. It does not charge fees based on assets under management.

Sole proprietors can open up a plan for $215 per year (or less than $20 per month). This is more expensive than opening an individual 401(k) at a brokerage like E*TRADE (that’s free), but it’s not a high cost to pay.

Ubiquity also offers an Express(k) plan which serves companies with up to 50 employees. The cost starts at $115 per month, but the plan can increase based on the number of employees that the plan serves. This plan doesn’t allow for Roth contributions.

The most expensive option is the Custom(k) plan which serves companies with up to 100 employees. This plan allows for Roth 401(k) contributions, and is fully customizable.

It's important to note that Ubiquity offers a custom plan, where as the free plans available from the major brokerages are typically limited in what they offer.

If you’re a sole proprietor, and you don’t plan to hire full-time employees in the near future, setting up a 401(k) through Ubiquity might be overkill. It makes a lot more sense to spend 30 minutes setting up an individual 401(k) at a brokerage company like E*TRADE. 

Small business owners with just a few employees don’t necessarily have to offer 401(k) plans to their employees, but it can be a huge benefit. In particular, if your employees are high earners (say you own an accounting firm or a consulting business), they’ll probably prioritize access to a retirement plan. In cases like that, it will serve you and your employees to start offering a 401(k) plan.

Ubiquity offers one of the most flexible and lowest-cost 401(k) plans in the market. What makes it unique is that it does not charge for assets under management. This makes it really tough to compare exact costs. Other low-cost providers such as Betterment for Business or Employee Fiduciary offer lower monthly costs, but these providers charge for assets under management.

Ubiquity may be more expensive for the first few years of the plan, but if your business grows, it may start to make even more financial sense.

Also, if you're looking to invest in real estate or have checkbook access to your 401k, Ubiquity might not be the best 401k provider for you.

If you’re an entrepreneur with employees, you should consider providing a 401(k) plan for them. This can help you retain great employees, and it doesn’t have to cost a ton of money. Ubiquity can help you provide a meaningful benefit to your employees.

However, it is important to collect at least two or three quotes from 401(k) providers before deciding which one makes the most sense for your business. Ubiquity deserves to be on your short list of low-cost 401(k) plan providers, but it’s not the only provider.

Do some research and make an informed decision about how you can best provide for the retirement needs of your employees.

Check out Ubiquity here.