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Choosing A 401(k) Provider: 7 Things To Consider

by John Stebbins on Mar 11, 2021 6:33:13 AM

If you’ve decided to offer a 401(k) to your employees to enhance your benefits package and boost employee satisfaction, your next step is to find a provider to help you design, administer and maintain your plan. Fortunately, there are hundreds of 401(k) providers out there. But that can also make it challenging to find the right one for your plan.

At Complete Payroll Solutions, we serve as a full-service 401(k) provider to thousands of companies throughout the Northeast. We know we’re not necessarily the best choice for everyone but we also understand the key factors to consider when selecting the right provider for your needs.

Since we know it can be daunting to choose a 401(k) provider, in this article, we’ll discuss the top 7 considerations when evaluating your options:

  • Fees
  • Experience
  • Ease of set up
  • Service
  • Fiduciary responsibility
  • Compliance support
  • Employee education

It’s important to note that you may opt to work with a full-service company who handles all the responsibilities involved with managing your 401(k) or one or more different service providers to take on the various roles. To make things simpler, here we’ll discuss using one provider.

After reading this article, you should feel confident about reviewing potential partners and selecting the right one for your company.

Top 7 Considerations When Selecting a 401(k) Provider


Every provider may charge a little differently for their services. These fees generally fall into four categories:

  1. Administration: The day-to-day administrative tasks involved with offering a 401(k) include providing informational materials and statements to participants, approving distributions, and compliance activities like annual nondiscrimination testing and Form 5500 filing. The fees for these activities usually range from $750 to $3,000 a year plus a per-participant fee that may run between $15 and $60 a year for each person enrolled.   
  2. Recordkeeping: These fees, typically paid for by employees, cover the costs to provide a platform to value participants’ accounts daily as well as trading. The recordkeeping fee could run from .10% to 2% of plan assets.
  3. Investment Advisor: Employees also pay a fee to have fiduciary oversight — meaning, responsibility for acting for the benefit of participants — over the plan-level investment choices and provide ongoing employee education. Generally, this fee is about .25% to 1% of plan assets.
  4. Mutual Funds: Another fee employees pay is one to cover the management of the mutual fund they invest in. The type of funds employees select dictate the fee. So a bond fund may be less costly than an international fund because there’s less trading. And index funds will have lower fees than an actively managed fund, which could have fees of .05% to 1.5% of plan assets.

Since each 401(k) provider’s fee structure will vary, you’ll want to find a provider who is transparent about the costs you’ll incur so ask what’s included. For example, you may want to know if they include ancillary services such as 401(k) loan processing in their fees or if they charge an extra fee for terminating the plan.


Not all 401(k) providers have the same level of experience. As you look at providers, find out about the expertise of the professionals who will be managing your plan. If you’re in a particular market, like a small business, you may also want to see if they have the knowledge and background to meet the needs of businesses like yours.

Providers may also differ in their experience with different types of retirement plans so check if they specialize in your specific plan type, such as a cash balance plan or new comparability allocation.

Ease of Set-Up

As you evaluate 401(k) providers, you’ll want to ask how easy it is to get your plan up and running and what’s required of you. All providers will ask you to fill out some documents but find out if you will get a dedicated point of contact to help you navigate the tasks involved and ensure you correctly complete the process.

You’ll also want to ask if they offer automatic enrollment for a hassle-free onboarding process that also increases participation. To make it even easier on your employees, find out whether the interface they’ll be using is simple and intuitive for tasks like monitoring their account or making changes to their salary deferrals.


Once you get your plan up and running, you’ll want to find out how the provider will make it easy for you to maintain your plan. For example, you may want to know if a provider integrates with your payroll service to make employee deferrals to the recordkeeping platform automatic or if you can manage employees online.

And, since you’ll likely have questions at some point, ask about a provider’s policy and response time on questions. You may also want to find a provider who has a presence nearby if you are interested in establishing a face-to-face relationship to help enhance your understanding of the information being shared.

Fiduciary Responsibility

Under ERISA, you have certain fiduciary responsibilities when you offer a 401(k) plan to employees. That includes actions like selecting and monitoring plan investments, benchmarking, and diversifying plan assets to minimize large losses. Depending on the level of support you want in this area, you should find out how the investment advisor will help you select and actively manage investments to reduce your fiduciary risk and protect your employees’ interests.

Compliance Support

If you offer a 401(k), you’ll need to make sure your plan complies with complex legal requirements. Some of the annual tasks required include:

  • providing notices
  • filing Form 5500 with the IRS, which is required under ERISA
  • undergoing non-discrimination testing each year to show that you’re not discriminating against lower-income workers in favor of owners or highly compensated employees

When investigating 401(k) providers, ask about the type of support they provide to keep your plan compliant and what you’ll be expected to handle.

Employee Education

For employees to feel more comfortable about enrolling in your 401(k) plan and drive participation, you’ll want to make sure the provider offers sufficient education that demonstrates the value of the plan and helps them make the best decisions for their future.

And, while 69% of workers are confident they’ll have enough to live comfortably in retirement, the support should be ongoing. Be sure to ask what educational resources are available to your employees, such as live meetings or online tools through the interface that will allow them to progress towards their retirement goals.

How to Choose a 401(k) Provider

As you can see, there’s a lot to think about when selecting a 401(k) provider. As a next step, it’s a good idea to narrow your list to two or three potential vendors and compare them in these 7 areas. As you evaluate your choices, you may be wondering if Complete Payroll Solutions would be right for you. 

You should consider Complete Payroll Solutions if you are looking for a company who:

  • can fulfill all the service provider roles to make it easier to maintain a plan
  • provides quick, easy 401(k) set up that takes 15 minutes or less
  • gives you and your employees access to the tools needed to plan and save
  • offers 100% fee transparency
  • delivers tailored financial guidance for managing your plan
  • sets you up with everything you need to run a compliant plan

If Complete Payroll Solutions sounds like a good fit for your business, learn more by reading our blog about the 401(k) solutions we offer


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