Ubiquity

How Much Does It Cost to Start a 401k?

Ubiquity Retirement + Savings has been an affordable provider of 401k plans, designed for small businesses, start-ups, and solopreneurs since 1999.

  • Streamlined, flat-fee plans starting at $75/month
  • Easy online set-up and management
  • Flexible investment options
Looking for a 401k for your team?

Customize a retirement plan for your small business in just a few clicks.

How many employees do you have?

Just me and/or my business partner/spouse

Though 401k plans were once designed only with large corporations in mind, there are now attractive, low-cost solutions for the small businesses that employ 47.5 percent of American employees.

At Ubiquity, we design small business 401k plans to fit your needs and budget.

How to Find the Right-priced 401k for Your Business

Whether you’re a solopreneur or a business owner with 100 or fewer employees, you deserve a fair-priced 401k plan that provides complete transparency, so you know exactly what you’re paying and why. While there are many 401k providers out there, not all are small-business-friendly.

Here are some 401k fees to watch out for:

  • Assets Under Management fees – AUM fees are sometimes assessed as a percentage of your plan’s total account balance. If you have a 1.5% AUM fee, that means you’re paying $1.50 for every $100 in your 401k account. AUM fees are charged for a wide range of reasons – most commonly for investment advice and as an incentive for the custodian to grow your plan balance. Beware how AUM fees eat at your savings!
  • Per-Person fees – Some 401k providers charge based on how many employees are in the plan, under the justification that “it costs more to provide recordkeeping and administrative services for more people.” Often, the per-person fee is added on top of a flat rate fee.
  • Transaction fees – Fees may be triggered by certain plan participant actions, such as changing a fund lineup or taking a loan from one’s 401k account. While these fees seem reasonable at the time, they can eat away at your savings – particularly when combined with an asset-based fee structure.

Flat fees are the most cost-effective model for small businesses looking to start a 401k. You may be charged monthly, quarterly, or annually, but you are not penalized for the size of your account.

At Ubiquity, we charge a consistent, fully transparent flat fee. Each month, you pay the same 401k recordkeeping cost, so you don’t have to worry about pricing escalations or wonder if you’re getting the same rate as others.

Are You Paying Too Much for Your Current 401k?

It’s always possible to switch your 401k provider if you worry you’re overpaying. If you currently have a 401k:

  • Assess your provider’s 408 2(b) fee disclosure to find out what you’re paying and why.
  • If this is your first time setting up a 401k plan, look at the fund lineup expense ratios, setup, and administrative costs.
  • Compare and model out beyond the current year to see the full impact of the fees you pay over time.

Are 401k Providers Worth the Cost?

A 401k plan provider will help you structure your 401k offerings and answer some key questions, such as:

  • Will you offer traditional and Roth accounts?
  • Who is eligible to participate?
  • Will you offer matching contributions or profit-sharing?
  • Will the contributions be vested?
  • Do you want a structure that allows you to opt out of annual testing requirements?
  • Will you let employees take out loans from their plans?

A plan provider will help you remain both competitive and compliant with the IRS. Once the initial plan has been designed, we’ll:

  • File the appropriate documentation to get started, including auto-enrollment paperwork if necessary
  • Prepare a summary plan description for beneficiaries
  • Approve loan and distribution payments
  • Monitor compliance
  • Perform status changes as they arise
  • Provide audit and discrimination testing support
  • File Form 5500, Form 1099-R, and Safe Harbor notices each year
  • Generate annual participant censuses
  • Conduct day-to-day employee communication

While large corporations may perform these functions in-house, nearly all small businesses enlist the help of a third-party administrator like Ubiquity to ease the burden.

Are There Any Other Costs to Get Started With a 401k?

In addition to paying a 401k provider for administration, you will likely want to select a broker who can help with investment choices and money management. Some administrators may have specific brokers they want you to use, but that is another way you could get locked into paying more. What if the broker charges a barrage of fees for services you neither want nor need?

At Ubiquity, you can choose whichever broker you prefer. While major brokerages may offer free plans, the offerings are limited compared to the fully custom plans and customer service you get from our professionals.   

Ready to start offering a retirement plan for your employees?
Get Started

© 2020 Ubiquity Retirement + Savings
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44 Montgomery Street, Suite 3060
San Francisco, CA 94104
Support: 855.401.4357

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© 2020 Ubiquity Retirement + Savings
Privacy Policy
44 Montgomery Street, Suite 3060
San Francisco, CA 94104
Support: 855.401.4357

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