Best Low-Cost Small Business 401k Providers

Small business owners face an uphill battle to get and retain top-quality employees. These owners may be able to compete on compensation and culture, but it can be a struggle to provide competitive benefits such as 401k plans.

Thankfully, online plan providers are bringing down the costs for small business owners hoping to provide 401k plans for their employees.

We explain how these companies can bring costs so low, and which low-cost small business 401k providers are best. Note: these are for small business plans for 2+ employees. Check out our Solo 401k Guide here if you're a one-person show.

How To Find Affordable Small Company 401k Plans

Self-employed people have long been able to create low-cost solo 401k plans. However, small businesses with more than one employee (or more than an owner and spouse) haven’t always had similar affordable options.

Setting up a 401k requires legal documentation to set up the plan. It also requires ongoing maintenance to manage employee and employer contributions, pay fees, and file tax-related paperwork. The companies listed in this article have all created technology that limits the amount of human intervention required to set up and maintain retirement plans for small businesses.

They’ve created “boilerplate” forms to simplify the setup process. Once the plans are set up, the companies integrate plan maintenance with payroll technology (such as QuickBooks or Paychex), so small business owners don’t need a new HR person just to manage the new plan. Typically, the plan providers also have websites setup, so employees can manage their accounts and contributions online.

These technologies offer massive benefits to small business owners who want a simple, straightforward 401k plan for their employees. Some of the companies offer a few different plan versions so business owners can decide which suits their needs. The pricing listed in this article reflects the current pricing for these standard plans. 

The companies may be able to offer customizations (such as after-tax contributions and in-service Roth conversions), but those were not listed on the sites. Small business owners looking for a “white glove” experience should expect to pay higher prices than those listed below.

Best Low-Cost Small Business 401k Providers

Each of the small business 401k providers below include all the basics for plan setup and maintenance. Each one also integrates with the major payroll software providers and provides ongoing recordkeeping and maintenance and check all the legal boxes.

Most of these companies serve as a fiduciary for the plan. And they keep records and ensure the plan complies with tax requirements.

1. Employee Fiduciary

Employee Fiduciary focuses exclusively on providing 401k plans for small business owners. It's been around since 2004, making it one of the pioneers in providing low-cost plans to small business owners.

Features

• Employee and employer contribution management: Employee Fiduciary manages contributions from both employees and employers. It has integrations with most major payroll providers to keep this as automated as possible.
• Employee and employer website: Employee Fiduciary manages a website that allows employees and employers to check balances fees and more.
• Simple plan setup: Dedicated account managers will help small business owners quickly set up plans.
• Ongoing recordkeeping for taxation: Employee Fiduciary manages all the paperwork associated with 401k taxation.
• No account minimums: Owners can start a plan with $0 in the plan.
• Option for self-directed 401k: Employers may elect for a self-directed 401k which is hosted on TD Ameritrade. 
• Most ETFs available: Employee Fiduciary allows businesses to select ETFs from over 377 fund families. Those who select a self-directed 401k option will have access to all assets that can be purchased through TD Ameritrade.
• Dedicated account manager: Employee Fiduciary provides a single point of contact to help employers get their questions answered and avoid administrative burdens.

Pricing

One-time startup fees are $500 for new plans or $1,000 to convert from an old plan.

Annual fees are $1,500 per year for employers with 1-30 employees. Employers with 30 or more employees must pay the $1,500 annual maintenance fee plus $30 for each additional employee over 30.

There's also an annual assets under management (AUM) fee of 0.08%. Most fees can be paid from account balances or billed directly to the small business.

Read our full Employee Fiduciary review here.

2. Guideline

Guideline was founded when Kevin Busque, founder of TaskRabbit, learned about the low 401k participation rate at TaskRabbit (his first company). 

Guideline is designed to make it easy for small business owners to set up plans, and easy for employees to opt into them. It also has robo-advisor elements where it automatically rebalances employee accounts based on their defined risk tolerances.

Guideline is also closely integrated with Gusto, which is our favorite small business payroll provider.

Here's a closer look at why it's made our list of the best small business 401k providers.

Features

• Employee and employer dashboards: Access information about your account through Guideline’s website.
• Automated recordkeeping: Guideline tracks all the information for your website.
• Robo-advisor features: Portfolio recommendations and automatic rebalancing are included.
  Options to upgrade to employer contributions and profit-sharing. Standard plans only allow for employee contributions. But employers can add upgrades to include employer matches, vesting, and profit-sharing.
• Employee onboarding: Guideline prides itself on maximizing employee participation. The onboarding is an important point of differentiation for this plan provider.

Pricing

Guideline has no initial setup fees. Instead, it charges fixed monthly fees and assets under management (AUM) fees. The AUM fee is 0.08% annually and is paid directly through the plan assets. The other fees are as follows.

• Core: $49 per month + $8 per active participant: This plan involves setup, and maintenance, but only allows employee contributions.
• Flex: $79 per month + $8 per active participant: Enables profit sharing, employer matches, and vesting options.
• Max: $129 per month + $8 per active participant: Includes dedicated account manager, and allows for comparable profit sharing.

3. Human Interest

Human Interest has a people-first approach to 401k plan administration. It wants to reduce the total administrative burden for small business owners trying to attract and retain top employees.

Human Interest has excellent resources, but it is a little bit more expensive than some of the other plan providers listed because small business owners must select an upgrade for Human Interest to serve as the plan fiduciary.

Features

• Employee onboarding: Human Interest provides easy-to-understand onboarding materials
• Automated rebalancing: Employees can opt for automated advice and automatic portfolio rebalancing.
• Easy-to-navigate websites: The Human Interest websites make it easy for employees and employers to understand and update their contributions and other plan factors.
• Tax support and recordkeeping: Human Interest provides detailed recordkeeping for plan participants.
• Option to upgrade to fiduciary: Small business owners who upgrade to the Complete or Concierge packages can have Human Interest act as a plan fiduciary. That means that Human interest can prepare, sign, and file all plan documents needed for IRS tax filing.

Pricing

Human Interest differentiates between employee and employer pricing. The employee fees are a bit higher than several comparable plans listed. Employees need to pay a 0.50% annual fee to Human Interest and the generally low fund fees in the plan.

In addition to the employee fees, employers can choose from three tiers of pricing.

• Essentials: $120 per month + $4 per month per eligible employee. This level includes all major features including payroll sync, plan administration, recordkeeping, and the option for employer contributions. However, Human Interest does not serve as your plan Fiduciary at this level.
• Complete: $150 per month + $6 per month per eligible employee. This level allows Human Interest to serve as a plan fiduciary, and it will file taxes on behalf of the plan.
• Concierge: $170 per month + $8 per month per eligible employee. This level includes a dedicated account manager.

4. Ubiquity

Founded in 1999, Ubiquity has been pioneering technology-driven solutions to qualified business plans for over two decades. Ubiquity's first-of-its-kind technology and low monthly pricing are two of the reasons that we consider it to be one of the best low-cost small business 401k providers available today. Here are the key details that you need to know about their 401k plans.

Features

Ubiquity offers a variety of retirement plans for small businesses and solopreneurs. This focuses on the small business 401k plans offered by Ubiquity.

• Wide range of investment options: Ubiquity offers a wide range of investment options including low-cost exchange-traded funds (ETFs) from a variety of well-known funds.
• Pre-tax and Roth contributions available: Ubiquity’s standard plan only allows for pre-tax contributions. But companies can opt to include Roth contributions as well.
  401k loan options. Ubiquity can enable 401k loans for small business owners that want to offer that benefit.
• Option for dedicated account managers. Small business owners who want to customize their plans can request a dedicated account manager.
• Options for more complex plan configurations. Ubiquity allows small business owners to request more complex plan options to maximize tax savings or to meet employee requests.

Pricing

Ubiquity always charges a flat fee rate for its plan administration. The simplest plans start at $90 per month in employer fees. But prices can increase based on the number of participants and the complexity of the plans.

Unlike most of the comparable low-cost providers, Ubiquity focuses on the ability to upgrade based on a company’s needs. It offers free consultations and will provide custom price quotes based on the company’s objectives.

5. Betterment For Business

Betterment for Business brings the popular robo-advisor to small companies that want to offer retirement plans. 

Betterment's business plans are simple and integrated with payroll software to optimize the experience. Here's a closer look at what they have to offer.

Features

• Robo-advisor for employees: Betterment is an established robo-advisor that offers a tested product for employees.
• Easy-to-navigate website for employees: The Betterment website is designed to be easy to use for employees.
• Low employee pricing: Employees pay 0.25% for assets under management, and Betterment provides automated rebalancing in exchange.
• Investments built around low-cost providers: Betterment offers socially responsible, target date, smart beta, and flexible portfolio designs. These are all built around low-cost investment options.

Pricing

Betterment for Business pricing depends on the payroll provider your company uses, and the number of employees enrolled. A two employee company will pay $1,596 per year (or possibly less depending on the payroll provider). Each additional eligible employee adds another cost.

Final Thoughts

Each of the small business 401k providers listed above (and several others not listed) reduce administrative hassles and make it easy for small business owners to start and maintain 401k plans. But the variable costs and benefits make it difficult to say that any particular plan would be best in all situations. 

Typically, small business owners will want to look for plans that serve as fiduciaries and handle all recordkeeping and administrative burdens. That keeps the plan from creating more work for over-extended business owners and executives.

Starting a small company 401k plan doesn’t need to be difficult or expensive. The low-cost small business 401k providers recommended above all have reasonable cost structures for businesses that have more than one employee.