401(k) with index funds?

April 4, 2007 1:12 PM

Help me find a 401(k) plan or retirement plan managed through a payroll service that offers index funds.

Currently, we have a 401(k) plan at work that offers only mutual funds with high fees (100 basis points). We only have four employees. We'd like to switch to a 401(k) provider that offers index funds as an option. The catch is that my boss would like the 401(k) plan to be offered through a competent payroll service (Paychex or similar). He is worried that without having a payroll service involved the contributions will not be transferred immediately and he will incur substantial penalties (he's had problems with this in the past). I understand that ADP does offer an all index fund 401(k) plan, but I've had two friends who have had horrible experiences with ADP (as in one friend didn't get paid for a month), so I'm leery. Has anyone had a good experience with ADP's all index fund 401(k)? Does anyone have good experience with something similar?

posted by bananafish to work & money (4 comments total)

Paychex, using Fidelity, offers several index options. If I could choose, however, I would choose Vanguard, as they have lower fees.
posted by four panels at 1:22 PM on April 4, 2007

My employer uses Paychex and their system and I have the exact same Vanguard index funds chosen through it that I have been choosing for my IRAs at Vanguard directly.

However, and to a net-nerd like me this is not insignificant, the Paychex system STINKS. Unlike my profit sharing account, which is with Vanguard and which I can see and manage through my Vanguard login, I can only see my Vanguard holdings through my Paychex 401k login.

Did I mention that the system stinks? I mean, ON ICE. And it took them several weeks past when they claimed it would be set up for us before they got it working, which was a major turnoff/worry-source for me.

That said, he may find that the services Paychex has to offer are well worth his time if he's had issues staying on top of things well enough to avoid fees. They've got a lot of offerings for small businesses beyond the 401k stuff - they're assisting my employer with updating the employee manual, diversity analysis (required for some federal hoohah we're involved in, apparently) and more.
posted by phearlez at 2:41 PM on April 4, 2007

You have gmail, bananafish.
posted by dr_dank at 3:00 PM on April 4, 2007

Fidelity offers a combination 401(k) and payroll service, and probably makes its index funds available through it (though actual funds are negotiated on a per company basis, based on a lot of things). I used to work there, in a tangential division, and my impression is that it was a growing and attractive product line, though you might get a different level of actual hands-on service than the big companies get.
posted by cocoagirl at 5:17 PM on April 4, 2007