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April 16, 2013 3:14 PM Subscribe
Which 401(k) third party administrator should we use?
Our company is looking for suggestions for 401(k) third party administrators (TPAs) who provide economical 401(k) plan administration and record-keeping services to small companies.
Currently our plan is administered by Paychex and our funds are Fidelity (with a self-directed brokerage account option to avoid high fee managed funds).
We have reason to believe that we are paying higher fees to Paychex than need be.
We want to be able to invest in either Fidelity or Vanguard index funds.
Here's what we have found so far:
- Vanguard: their TPA fees still seem quite high.
- Fidelity: they said our company was too small for them.
- Principal Group: they require we work through a financial advisor, which we don't want to do.
Google search: tons of TPAs, but without contacting a bunch of them we have no idea which ones have a good reputation, a low cost structure, etc.
Thank you for specific suggestions.
Our company is looking for suggestions for 401(k) third party administrators (TPAs) who provide economical 401(k) plan administration and record-keeping services to small companies.
Currently our plan is administered by Paychex and our funds are Fidelity (with a self-directed brokerage account option to avoid high fee managed funds).
We have reason to believe that we are paying higher fees to Paychex than need be.
We want to be able to invest in either Fidelity or Vanguard index funds.
Here's what we have found so far:
- Vanguard: their TPA fees still seem quite high.
- Fidelity: they said our company was too small for them.
- Principal Group: they require we work through a financial advisor, which we don't want to do.
Google search: tons of TPAs, but without contacting a bunch of them we have no idea which ones have a good reputation, a low cost structure, etc.
Thank you for specific suggestions.
ADP is somewhere to go (my small company uses them), although I don't know if they do TPA services without also doing your payroll services.
That said, it should be realized that low TPA costs (you might be able to find $0!) trade with high fund costs. In other words, the reason everyone is quoting high TPA costs is because they aren't able to roll those costs into the funds.
posted by saeculorum at 3:52 PM on April 16, 2013
That said, it should be realized that low TPA costs (you might be able to find $0!) trade with high fund costs. In other words, the reason everyone is quoting high TPA costs is because they aren't able to roll those costs into the funds.
posted by saeculorum at 3:52 PM on April 16, 2013
I don't have an alternative to Paychex however, the company I work for (about 20 people in the US) uses Paychex.
We used to have a non-brokered plan with straight Fidelity funds but a couple of years ago we changed to a brokered plan with a huge range of funds including Vanguard Signal funds (very low ER). I'm not sure which of those is a "self-directed brokerage" option, but our switch required us to registering a nominal broker (for some reason we used someone from Ameritrade but I've not contacted him since the switch).
posted by NailsTheCat at 7:32 PM on April 16, 2013
We used to have a non-brokered plan with straight Fidelity funds but a couple of years ago we changed to a brokered plan with a huge range of funds including Vanguard Signal funds (very low ER). I'm not sure which of those is a "self-directed brokerage" option, but our switch required us to registering a nominal broker (for some reason we used someone from Ameritrade but I've not contacted him since the switch).
posted by NailsTheCat at 7:32 PM on April 16, 2013
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posted by ethidda at 3:49 PM on April 16, 2013