Aren’t All 401(k) Providers The Same?

Author: Siân Killingsworth / Reviewer: Callie Adams Farnsworth, QKA, CAFCA
22 May 2020 / 401(k) Plan Information

No, not all 401(k) providers are the same.

They vary greatly in cost, ease of administration, support, and flexibility. Even comparing the top tier plan providers, you’ll notice a variance in service. When you partner with Ubiquity, you are choosing a company that puts you and your employees first. Here you will see why Ubiquity is consistently ranked among the top 401(k) providers for small businesses.

Factors When Choosing a 401(k) plan Provider:

• Plan cost: We have the ability to leverage down investment expenses with transparent, low, flat fees. With plans starting as little as $18/month for solo 401(k)s and $90/month for Safe Harbor 401(k)s, you will never overpay to administer a retirement plan for you and your employees. Ubiquity is the only small business 401(k) provider that has maintained a low, flat-fee model since 1999. Some providers charge fees for Assets Under Management (AUM), transactions, investment advice, and custodian compensation under the guise that it’s necessary to grow the portfolio aggressively.

• Ease of setup and administration: With Ubiquity, you can have your plan up and running in as little as 15 minutes. We integrate with your existing Payroll and HCM practices, so you can honor your fiduciary responsibilities and keep it simple while modernizing your benefits with a 401(k) plan.Built-in auto-enrollment makes it effortless for employees to save for their future (and for you to enjoy that $500/year tax incentive for the first three years of a new plan.) You may find that not every plan provider has the capability to integrate or auto-enroll, or perhaps they charge extra for these services.

• Level and type of support: Some companies offer online-only chat services, whereas we staff both online and phone support. We guarantee the highest level of support from highly-trained, US-based personnel. Whether you prefer a direct line to your representative, email, or a portal submission ticket, we are here to answer questions for both employers and employees.We also offer access to an engaging online financial wellness portal, so your employees can be more actively involved in retirement planning. Not every 401(k) plan provider goes the extra mile to assist with employee participation.

• Can you make Roth contributions? Ubiquity gives you full flexibility to set up pre-tax (Traditional) or post-tax (Roth) retirement accounts. There is extra administrative work associated with Roth accounts, so not every plan provider offers it. You can make Roth contributions with our Solo(k), Saver(k), and Custom(k) plans, which allows you the ability to pay your taxes upfront and pay nothing when you take the money out in retirement.

• Can you take loans from your plan? Allowing loans within a 401(k) plan is permitted by law, but employers are not required to do so. Loans are a feature of most 401(k) plans, as employees generally prefer to have maximum freedom and control over their funds. While some providers consider loans a hassle, Ubiquity allows you the freedom to borrow from a 401(k). In addition to administration, we’ll help you craft appropriate guidelines on making the loans, so employees do not abuse the benefit and fritter away their savings.

• Are you allowed a range of investment choices in the plan? Ubiquity allows you to control your own investments with efficient investing options and open trading. You choose any broker you wish, and we administer the plan according to your wishes. Some plan providers have preferred brokers they work with, which limits your choices in funds and forces you into prepackaged options that may not be best for you and your employees.

How Does Ubiquity Stack Up To Other 401(k) Providers?

Compared to other popular 401(k) providers like America’s Best, Ascensus, Human Interest, Merrill Edge, PAi Co-Pilot, and Share-Builder:

• Ubiquity has the highest Google review rating of 4.1 (Ascensus, the next best, has a rating of 3).
• Ubiquity is the least expensive option by $225 (PAi Co-Pilot) to $1,545 (Share-Builder).
• Ubiquity offers full investment flexibility (only comparable to Ascensus).
• Ubiquity does not force you to pay investment advisor fees (like Ascensus).
• Ubiquity and Ascensus do not charge AUM advisory and per-person recordkeeping fees.
• Unlike Ascensus, Ubiquity runs with the big dogs in supporting multiple payroll integrations.
• All the BEST plan providers offer dedicated employee/employer phone, email, and chat support.
• Ubiquity is in league with Ascensus and PAi Co-Pilot in offering dedicated advisor support.
• Though Ubiquity and Ascensus offer enrollment presentations for employers and employees, ONLY Ubiquity provides financial wellness tools.

Do You Need a New 401(k) Plan Provider?

Ubiquity not only initiates new plans, but we can also transfer your accounts to a new program if you’re unhappy with your current provider. There are four common pain points employers have that cause them to switch:

• The fees are too high. The all-in costs of administering a 401(k) plan can range from 0.5 to 4.5%, depending on the size of the program. Most small businesses end up paying 1.5 to 2% more than larger corporations due to their limited bargaining power. While an administrative fee is fair for recordkeeping, legal services, trustee services, customer support, and educational materials, you shouldn’t have to pay AUM fees or nickel-and-dime fees for transactions, per-participant, or loan servicing.
• You are offered a limited choice. It may sound “convenient” to work with a 401(k) provider who already has a broker of choice they work with, but for many employers, this spells high costs and limited investment options. What if the broker focuses on funds with commissions, sales loads, or 12b-1 fees? What if the broker doesn’t offer enough diversity?It’s better to have the freedom to shop around. That way, if you’re dissatisfied with the broker, you can acquire a new one, without having to find a new plan provider as well.
• There is no employee engagement assistance. Employees who understand their contributions, costs, and investments are empowered to maximize their benefits and savings. Auto-enrollment makes a 401(k) easy, but it can be difficult for employees to understand how much they’re contributing, what the employer match is, how to access their 401(k) account, how to change contributions or investments, and how to best take advantage of the plan.
• You don’t like the support. Some 401(k) providers put more resources into acquiring customers than toward providing good user experience. The main landing page may look slick, but there is clunky, outdated software for the employer/employee portal. You may receive personalized customer care at first, but your questions go unanswered once you’ve been set up in the plan.Lack of attention to detail can result in employees who aren’t maximizing their benefits or who aren’t satisfied with the amount of money coming out of their paychecks. As confused employees bring up their concerns, you may need to make adjustments – only to find delays in administrative requests, which is not good for you or your workers.

So, to recap: NO, all 401(k) providers are NOT the same! Ubiquity has been administering small business 401(k) plans since 1999. We’ve built our service around many small business pain points to outcompete other plan providers on all fronts. Contact us to learn more.