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The Best Employee Retirement Plans of 2020

By Lori Fairbanks,
business.com Staff
| Updated
Jul 14, 2020

Looking for the best retirement plans? We have easy-to-read, expert unbiased reviews and feature comparisons of the best employee retirement plans.
Featured Sponsor
Integrates with Paychex payroll
Several plan options available
Provides fiduciary support
Best Safe Harbor 401(k) Plan
Affordable monthly fee
Full-stack solution
Managed or customized portfolio
Best SIMPLE IRA Provider
No setup or plan maintenance fees
Low trade fees
Complimentary access to advisors
Best 401(k) Plan Provider
Low fees
Full-stack solution
Payroll integration
Best Plan for Self-Employed Workers
Free account setup
Lowest ETF expense ratios
Waivable annual fee
Looking for the best retirement plans? We have easy-to-read, expert unbiased reviews and feature comparisons of the best employee retirement plans.
Updated 07/14/20

We've updated this page to address the Department of Labor's decision allowing private equity investment options. Scroll down to "What to Expect in 2020" to learn more about the DOL decision.

As a small business owner, you want to offer your employees a competitive benefits package, but you may feel overwhelmed at the prospect of an employee retirement plan. Luckily, there are many employee retirement plans on the market that are designed for even small businesses, including those with just a handful of employees. Read on to learn about our recommendations on the best employee retirement plans for small businesses and how we selected them.

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How We Decided
Our team spends weeks evaluating dozens of business solutions to identify the best options. To stay current, our research is regularly updated.

Compare Our Best Picks

  Guideline ShareBuilder


Yes 20+
Roth 401(k) Yes Yes 20+ 
Safe Harbor 401(k) Yes Yes No No
Solo 401(k) No Yes Yes Yes
SEP IRA No No Yes Yes

Our Reviews

Paychex Retirement Services: Featured Sponsor

Paychex retirement planning services include assistance with the selection of 401(k) plans and record-keeping, as well as advisory services to assist in signup and ongoing retirement plan support. Paychex also offers mobile self-service. Among some of the features and tools Paychex Retirement Services offers are per-pay-period investing, automatic enrollment and autoescalation, quarterly compliance testing, and loan processing and distribution.
Read Review

ShareBuilder 401k: Best Safe Harbor 401(k) Plan

ShareBuilder 401k assumes fiduciary responsibility, taking care of custodianship, plan administration and record-keeping.
Participants can choose from five managed portfolios or customize their holdings with a selection of ETFs from multiple providers.
ShareBuilder 401k charges a setup fee.

ShareBuilder 401k offers the best safe harbor 401(k) retirement plan for small businesses because in addition to making this popular type of plan affordable for small business owners, it takes on the fiduciary responsibility and performs plan administration, custodianship, record-keeping and advisory services – saving you the time and expense of working with, and overseeing, multiple companies to accomplish these duties. 

ShareBuilder 401k specializes in providing full-featured 401(k) employee retirement plans to small business owners, from owner-only businesses to those with up to 100 employees. It offers a choice between the traditional, safe harbor and individual 401(k) plans – all plans have a Roth option for employee contributions. 


Though commonly offered by large businesses, 401(k) plans used to be very expensive for small businesses; the rep we spoke with said that it previously cost between $5,000 and $10,000 per year to run this type of plan. Luckily, there are now plan providers like ShareBuilder 401k that have small business 401(k) retirement plans with lower costs. Here's what you can expect to pay. 

Safe harbor 401(k). If you're switching to ShareBuilder 401k from another plan and rolling over $500,000 or more in plan assets, you may be eligible for lower setup, administration, and asset management fees than those listed here. Also, as your plan assets increase, your administration costs decrease; they're typically free for plans that reach or exceed $5,000,000 in assets. 

  • Setup fee: $495.
  • Administration costs: These fees start at $95 per month, which covers up to 10 plan participants.
  • Plan termination fee: $1,000. There's no contract length for your plan, so you can cancel at any time. However, you will pay this fee. Every 401(k) plan provider charges this fee to cover the costs of transferring assets and filing paperwork with the Department of Labor. This is an average dollar amount for this fee. 

Traditional 401(k). As with the safe harbor plan, you may be eligible for lower fees if you're rolling over assets of $500,000 or more. Likewise, your administrative costs may be waived when your plan reaches $5,000,000 in assets. 

  • Setup fee: $750
  • Administration costs: Start at $110 per month, which covers up to 10 plan participants
  • Plan termination fee: $1,000. As with the safe harbor plan, there's no contract length, so you can cancel at any time, but you will pay this fee. All plan providers charge it, and the amount is average for this fee

Owner-only 401(k). Also called an individual 401(k) or solo 401(k), this plan is only for business owners with no employees. Businesses with multiple owners are eligible, as are owners' spouses who work for the business. Pricing may be waived for plans that have $250,000 or more in assets. 

  • Setup fee: $150
  • Administration costs: Start at $25 per month, per owner
  • Plan termination fee: $150 

Incidental plan sponsor fees. There are several fees for nonstandard services that are only charged if you these services. For example, if you need your IRS Form 5500 amended, it costs $100. Or, if you switch from a traditional 401(k) plan to a safe harbor 401(k), you would pay a $250 product migration fee. The full list is available on the company's website. 

Plan participant costs: For all three plan types, participants pay the following fee.

  • Asset management fee: 0.75%. This fee is lower than the industry average and covers the costs of managing your investment portfolio, such as fund rebalancing, as well as investment advisory services.
  • Fund expense ratio: 0.06 to 0.08% for model portfolios, which is also low. The ratio is variable for custom portfolios, but there aren't any transaction fees on the ETFs you purchase and trade. 

Incidental participant costs: There are also fees for specific participant events. A full list of these fees is available on the webpage link above.

  • Loan origination fee: $75
  • Loan maintenance fee: $75 per year
  • Distribution: $75 per withdrawal
  • Required Minimum Distribution: $100 


Safe harbor 401(k)s differ from traditional 401(k) plans in that they require employers to match or contribute a certain percentage to employee accounts, and contributions are immediately vested; matching and vesting are optional with traditional 401(k) plans. These Safe Harbor rules satisfy the IRS's nondiscrimination requirements, allowing business owners and highly compensated employees to make maximum contributions to their own 401(k) retirement accounts. 

Here's a sampling of what ShareBuilder 401k offers with its Safe Harbor 401(k) plans. 

Fiduciary support. ShareBuilder 401k serves as the plan administrator, custodian, record-keeper and ERISA 3(38) investment manager. As the plan sponsor, you oversee payroll contributions and complete a year-end checklist. 

Account setup. To get started, you can fill out an online form and have an advisor call you, or you can call the company to immediately speak with an advisor. He or she will provide you with a quote specific to your business and go over plan details with you. You can then begin filling out the online plan paperwork. Your advisor can walk you through the setup process if you need help. It then takes a few weeks to roll out the plan. 

Investment options. Participants can choose from five managed portfolios, or they can customize their portfolio from ShareBuilder's selection of low-cost, exchange-traded funds (ETFs) from Vanguard, iShares, PowerShares and State Street. 

Fund research tools. On the company's website, you can view the roster of ETFs and managed portfolios. Each fund is linked to a Morningstar profile with information about the fund's strategy, historical performance, asset allocation and other details. 

Advisory services. ShareBuilder 401k has an investment committee that helps plan participants diversify their investments by managing its model portfolios and investment roster of ETFs. 

Reporting requirements. For both safe harbor and traditional 401(k) plans, you're required to submit the IRS Form 5500. The individual 401(k) plan carries this requirement as well, once your plan assets are $250,000 or more. ShareBuilder 401k prepares the form for you so all you need to do is sign and send it. 

Loans. All three plans allow participants to take out loans against their 401(k) of up to 50 percent of their account balance, though it may not exceed $50,000. 

Additional Considerations

You can call ShareBuilder 401k or fill out the form on the company's website to have an investment advisor call you. You'll work with this individual during plan setup and for plan support for the life of the plan. For other issues, you'll work with the company's administration team. 

When we called the company as part of our testing, posing as the owner of a small business, we were quickly connected to an investment advisor who was personable and knowledgeable. He volunteered information about pricing, patiently explained the difference between different types of 401(k) plans and offered to email us a quote and additional information about the plans, which we received less than 15 minutes after our call ended. 

If you prefer to learn about the company's offerings or troubleshoot issues online, you can read the basics on the ShareBuilder 401k website, but there isn't a searchable knowledgebase, blog or other resources. You can, however, find some of this information on the ShareBuilder website, but a lot of it hasn't been recently updated. 


As mentioned above, the ShareBuilder 401k website doesn't have the same level of information as some of its competitors. This may be frustrating for small business owners who would rather find information online than call the company, but it posts its pricing, as well as a good overview of its offerings, and when we called the company, we had a positive interaction with the advisor we spoke with, who was happy to answer all our questions. It also lacks a mobile app, but the advisor we spoke with assured us that its website is mobile-friendly.



Fidelity Investments: Best SIMPLE IRA Provider

Fidelity doesn't charge setup, monthly service, custodial or advisory fees.
Participants receive complimentary access to the Fidelity Guidance Team, who can help them choose funds based on their retirement goals.
You aren't assigned a dedicated account manager or advisor. Instead, you contact the retirement team or the general customer support team for assistance.

A Savings Incentive Match Plan for Employees, or SIMPLE IRA, is a good retirement savings plan for small businesses with 100 or fewer employees. Self-employed individuals can also use it. It doesn't allow participants to save as much as 401(k) plans do and requires you as an employer to match or contribute to employee accounts, but it's easier and cheaper to set up and maintain than 401(k) plans. It also doesn't require you to submit an IRS 5500 tax form or submit to nondiscrimination testing.

Fidelity Investments offers the best SIMPLE IRA plan to small businesses because it doesn't charge any setup or plan maintenance fees, and the only costs for plan participants are trade fees and fund expense ratios – and its trade fees are some of the lowest in the industry. Fidelity also provides free access to advisors to help you and your employees pick investments. Fidelity is a leading financial services corporation that provides wealth management and brokerage services. It serves 28 million individual investors and holds over $7 trillion in customer assets.


One of the main reasons that many small business owners haven't yet offered a retirement plan to their employees is the expense – they worry that their business is too small and can't afford to sponsor a plan. If you share this concern and costs have been holding you back from offering a retirement savings plan for your employees, Fidelity's SIMPLE IRA may be the solution. Here's what you can expect to pay for this employee retirement plan:

  • Setup fee: $0
  • Monthly service fee: $0
  • Custodial fees: $0
  • Advisory fees: $0

The only thing that you, as the employer and plan sponsor, will need to pay is either a 3% match for employees participating in the plan or a 2% contribution to all employee accounts. However, this is a deductible expense.

Here's what plan participants can expect to pay:

  • Trading fees: $4.95 for online U.S. equity and option trades
  • Fund expense ratio: Varies, depending on the funds each participant chooses for their investment portfolio; commission-free ETFs from Fidelity and iShares available

Fidelity's SEP IRA and self-employed 401(k) plans share this fee structure. For businesses with 20 or more employees and an existing retirement plan to roll over, it has a 401(k) option; fees depend on the specifics of your plan.


SIMPLE IRA retirement plans aren't as stringently regulated as 401(k) plans. You don't have to file Form 5500 with the IRS or submit to nondiscrimination testing. However, this plan type is limited to businesses with 100 or fewer employees.

Account setup: If you call Fidelity and speak with one of its small business retirement specialists, the company will send you and your employees enrollment packets to fill out. If you don't want to wait, you can download the forms online. After it receives your paperwork, Fidelity can set up your account by the next day, according to the representative we spoke with.

Payroll integration: Fidelity supports electronic funding of participant accounts and works with payroll providers, though some payroll companies may charge fees for this convenience. If you handle payroll yourself, you can use Fidelity PlanManager – an online plan administration tool – to process salary deferral contributions for your employees as well as employer matches or contributions.

Investment options: Choices include bonds, exchange-traded funds, FDIC-insured CDs, mutual funds and stocks. The company notes that mutual funds are limited to those that waive investment minimums for SIMPLE IRA participants. You can view the list of eligible mutual funds on the company's website. In addition to Fidelity mutual funds, options include well-known fund families such as Janus no-load mutual funds, Morgan Stanley and Wells Fargo. Target-date funds are available.

Fund research tools: Fidelity provides a wealth of information about each fund, including a Morningstar snapshot, monthly fact sheet, prospectus and comparison tool.

Advisory services: You and your employees who participate in this retirement savings plan have complimentary access to the Fidelity Guidance Team. These advisors can help you choose funds for your investment portfolio based on your retirement goals.

Loans: No loans are available from this type of plan.

Withdrawals: As with most retirement plans, participants can begin withdrawing funds without penalty after age 59.5. Required minimum distributions begin at age 70.5.

Mobile app: Participants can manage their portfolios using Fidelity's mobile app or through an online portal. The app is available for Apple and Android phone and tablets, plus the Apple Watch, Apple TV, Kindle Fire tablets and Amazon Echo. Abilities vary by device, but on phones and tablets, you can monitor your portfolio and make trades.

Additional Considerations

You can call Fidelity's retirement team from 8 a.m. to 8:30 p.m. ET, Monday through Friday, or the company's general customer service number 24/7. The company representative we spoke with when we called the company posing as a small business owner, provided excellent customer service. He took the time to explain what the plan is, how it works and how much it costs. After answering our questions, he walked us through the steps to set up a plan on the company's website, demonstrating how easy it is to do.

In case you want to learn more about planning for retirement or investing, Fidelity provides multiple online resources, such as retirement-planning calculators, webinars, and articles about trading and investing, retirement planning, and personal finance.


This type of retirement plan has some limitations that aren't specific to Fidelity. For example, all contributions are pretax only – there is no Roth option. It has a lower contribution limit than 401(k) plans, and employer contributions are immediately vested.

As for Fidelity-specific limitations, although you can download application documents, there's no option to submit them electronically – you must mail them in, which is inconvenient. You also don't have a dedicated account manager or advisor to work with; rather, you contact the retirement team or the general customer support team for help or information about your plan.



Guideline: Best 401(k) Plan Provider

Guideline serves as the ERISA 3(16) and 3(38) fiduciary, and takes care of reporting and nondiscrimination testing.
Guideline makes its plans affordable for participants. It offers six managed portfolios, with a blended fund expense ratio of 0.06%.
Some users report dissatisfaction with Guideline's customer support. To address these concerns, the company created the Prime Plan, which includes a dedicated account manager and priority support.
Guideline offers the best 401(k) employee retirement plan for small businesses because it's a full-stack solution with low fees. Traditionally, 401(k) plans were unwieldy for many small businesses because, to comply with federal ERISA regulations, you had to enlist several companies to help with administration duties, recordkeeping, investment management and compliance testing. Guideline does it all, and it also serves as the ERISA 3(16) and 3(38) fiduciary. When you sign up with Guideline to sponsor a 401(k) plan, you don't pay advisory fees, custodian fees or assets-under-management fees. Rather, you pay a setup fee and then a monthly service fee based on the number of plan participants. There's no lengthy contract – just a document for the terms of service – so you can cancel your plan at any time. There is, however, a wind-down fee if you terminate your plan. Although it's expensive, this is a standard fee that covers the costs of transferring assets and handling the paperwork associated with shutting down a plan. The only regular expense for plan participants is the mutual fund expense ratio for their investments. The company estimates that, on average, this is a low 0.06%. Otherwise, fees are per incident, such as if a participant makes a hardship withdrawal or takes out a loan against their investment account. Guideline offers six managed portfolios for plan participants to choose from. If participants prefer to customize their portfolios, they can choose from more than 40 low-cost index funds, including several from Vanguard. April 2020: Guideline has updated its plans and pricing. It no longer charges a setup fee, and it now offers two plans. The Startup plan costs $39 per month, plus $8 per month, per participating employee. The Prime plan, which comes with a dedicated account manager and priority support, costs $99 per month, plus $8 per participating employee.
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Vanguard: Best Plan for Self-Employed Workers

There is no setup fee, plus no sales loads or commissions on Vanguard ETFs and mutual funds; all you pay are fund expenses.
You can choose from more than 100 Vanguard mutual funds, which have some of the lowest expense ratios in the industry.
There is an annual account service fee, but you may be able to have it waived, depending on the type of account, your account balance and other factors.

Vanguard's individual 401(k) is the best self-employed plan because there's no cost to set up an account, and the only investment fees you pay are fund expenses – there are no sales loads or commissions on Vanguard exchange-traded funds (ETFs) and mutual funds to eat into your savings. In fact, one thing you'll notice as you look into retirement plans is that a lot of other companies offer Vanguard funds as well because of these low fund expenses. The company does charge an annual account service fee, but it's waivable, depending on your account balance. 

In addition to individual 401(k) plans, Vanguard offers small business 401(k) plans, SEP and SIMPLE IRAs, as well as traditional and Roth IRAs. Vanguard has more than $5 trillion in investor assets under management and is the largest mutual funds provider in the world. 


Investment experts caution against paying too much in investment fees because they erode your returns, and even small percentages can impact potential long-term savings. Vanguard's low fund expense ratios make it a popular choice among investors, and Vanguard is our best pick for individual 401(k) plan providers. 

Individual 401(k) plans are best for self-employed people who want to save as much as possible in their retirement accounts, as you can contribute as both an employee and as an employer, and invest up to $56,000 per year (or up to $62,000 if you're age 50 or older). Like other 401(k) plans, you can save up to $19,000 as an employee, and you can choose between tax-deferred or Roth contributions. Then, as an employer, you can contribute up to 25 percent of your self-employment income. 

Here's an overview of Vanguard's pricing for individual 401(k) plans. 

  • Setup fee: None
  • Minimum initial investment: None, but funds have a minimum investment of $1,000
  • Average fund expense ratio: 0.11% for Admiral Shares, and 0.18% for Investor Shares
  • Trading fees: All Vanguard ETF and mutual funds have no transaction fees
  • Account service fee: $20 annually per fund. This fee is waived when you have an account balance of $50,000 or more (Other types of Vanguard accounts have different requirements to have this fee waived. For example, some of its account types only require you to sign up for electronic delivery instead of paper statements.) 

Because this type of retirement vehicle is intended for higher savings, we didn't deduct points for the account service fees, since they're waivable with an account balance of $50,000. The rep we spoke with suggested investing in a single fund – such as a target date fund – to minimize this fee until you're eligible to have it waived. 


Vanguard differs from many of its competitors in that it's an online brokerage – it doesn't have any physical offices where you meet with an in-person investment advisor. Instead, you set up your account and manage your investments online, which helps the company keep its costs low. It's also different in that it's not a publicly traded or privately owned company, rather it is owned by its investors. Here's more information on its features. 

Account setup: You can download the Individual 401(k) Employer Kit from Vanguard's website. It includes instructions and all the forms you need to set up your account, including a plan adoption agreement and basic plan document. If you have questions or need help filling out the forms, you can call the company for help. Once you enroll as a Vanguard client, it takes seven to 10 business days to set up an individual 401(k) plan. 

Investment choices: You can choose from more than 100 Vanguard mutual funds. Of these, 38 are index funds with Admiral Shares (a Vanguard share class that has a lower average expense ratio ranging from 0.04 to 0.45%, with an average of 0.11%). 

Fund research tools: Vanguard provides multiple tools to help you research funds before you invest in them. You can do side-by-side comparisons, view historical charts that track a fund's performance, search funds by your investment objective and create a watch list to monitor specific funds. 

Advisory services: You can call the company and speak with a representative who can offer you guidance on your investments, but this account type isn't available for Vanguard's personal advisory services. 

Reporting requirements: If your account reaches $250,000 or more in assets, you will be required to submit IRS Form 5500. The company will provide you with the information you need to complete this form. 

Loans. No loans are available from this account. 

Rollovers. If you have an old 401(k) accounts from a previous employer, you can't roll it over into this account, but you can roll it over into a Vanguard IRA. If you call the company, a representative can help you set the IRA up and transfer your assets. 

Withdrawals. Vanguard offers a free Required Minimum Distribution Service that calculates your RMD and can automatically deposit your money in your bank or transfer it to a nonretirement investment account. 

Mobile app. Available for Apple, Android and Kindle devices, you can use the Vanguard app to check your account balance and performance, analyze your portfolio, research funds, read financial news, and buy and sell funds. Once your account has been open for at least 60 days, you can also use the app with the camera on your phone or tablet to make mobile check investments. 

Additional Considerations

If you need help setting up an account, selecting investments or need to speak with an account representative, you can call Monday through Friday between 8:00 a.m. and 8:00 p.m. ET. You can also email the company for customer support. The company also offers a variety of searchable online help resources, including articles, FAQs, comparison charts, calculators and online lessons on financial topics such as getting the most out of your retirement plan, estate planning and saving for college. 

When we called the company, posing as a small business owner, we spoke with a representative right away. The rep was patient and knowledgeable, asked about our situation and took the time to explain our options and the setup process. He disclosed fees and explained what they are, how to get them waived, and offered tips to minimize the fee until we qualified to have them waived. 


If you want to trade stocks and options rather than invest in ETFs and mutual funds, other brokerages have lower trading fees. As mentioned above, Vanguard doesn't have physical brokerage offices, so if you prefer to meet with a financial advisor in person, this isn't the best option for you. Lastly, Vanguard charges an annual account service fee, and you need to have $50,000 in your Vanguard accounts to have the annual maintenance fee waived for the individual 401(k) plan.



Employee Retirement Plan Pricing

When you're evaluating how much an employee retirement plan costs, there are two sets of pricing that you need to consider: your costs to sponsor the plan and your employees' costs to participate in it. These costs vary by the type of plan you offer and the provider. You should also look into which tax incentives are available to you and how they affect your overall cost.

Tax Advantages of Offering Employee Retirement Plans

As mentioned above, the government offers tax incentives to small businesses that sponsor retirement plans for their employees. As you're calculating what it would cost to sponsor an employee retirement plan for your business, consult your accountant or tax advisor to find out which tax credits and deductions you're eligible for and how they would affect your tax strategy.

  • Eligible businesses can claim 50 percent of startup and administration costs, up to $500 per year, for the first three years they sponsor a plan.
  • Contributions you make to your employees' plans are tax deductible.
  • Contributing to and participating in a retirement plan may lower your income tax bracket.

401(k) Plan Costs

This type of plan used to be rare for small employers to offer due to the costs and complexity of complying with federal regulations. You needed a plan administrator, custodian, record-keeper and financial advisor. Each of these parties charge fees; some are fixed, while others are based on plan assets. Some companies offer multiple services in-house but charge extra for some of them. Sound confusing? We think so too.

In our opinion, hiring multiple companies to handle different tasks is burdensome and expensive, so in our search for the best retirement companies, we looked for all-inclusive 401(k) providers that cater to small businesses. They take care of administration, record-keeping, custodian and advisor duties, so you only need to work with one company. They also act as an ERISA 3(38) fiduciary, which lowers your liability risks. Some of these companies use "robo advisors" that use algorithms to manage assets, allowing them to forgo fund management or advisory fees, so you only pay the fund expense ratio. Most of these companies offer low-fee index funds and mutual funds to keep expense ratios down. Here's an overview of the fees you can expect to pay.

  • Setup or establishment fee: Most retirement plan companies charge around $500 to set up your plan, but some offer discounts or promotions that reduce or waive this fee. If you're converting an existing plan, this fee is often higher.
  • Monthly or annual administration fee: Most retirement services charge this fee, which is around $130 per month or $1,500 per year on average. It may also be charged quarterly.
  • Monthly or annual cost per employee: This fee is sometimes included in the monthly administration fee. For those that charge it separately, the average cost is $6 per employee per month or $72 per employee per year. Usually the employer pays this fee, but sometimes the employee (plan participant) pays it.
  • Investment, advisory, custodian or other asset-based fee: Most companies charge some sort of asset-based fee that the plan participant pays. It ranges anywhere from fund expense ratios that cost around 0.06% to 0.1%for index-based funds to advisory services that cost up to 0.75% annually.
  • Termination fee: Every plan charges this fee, and it usually costs around $1,000, though a few companies charge less. One of the companies we spoke with explained that shutting down a plan and transferring assets is more involved on their end than setting up a plan.
  • Nonstandard or event-based fees: If plan participants take out loans from their investment accounts or reach the age where they're required to take minimum distributions, they'll pay various related fees, such as loan origination and loan maintenance fees.
  • ERISA bond (also called a fidelity bond): This isn't something the small business 401(k) plan providers offer, but you'll be required to have it when you sponsor an employee retirement plan. You should be able to get it from your liability insurance company, or your retirement services provider can recommend a source. The reps we spoke with estimated costs from $35 to $100 for one year.

IRA Plan Costs

Employer-sponsored IRAs are much simpler to set up and maintain than 401(k) plans, but they don't allow employees to set aside as much money in their workplace retirement plans. IRAs have a very different pricing structure from 401(k) plans, and there's a lot of variance between brokerages. Here's a sample of the fees you should look for when you set up this type of employee retirement plan. 

  • Setup fee: Most brokerages don't charge a fee to set up an IRA retirement plan.
  • Account minimums: Some brokerages have a minimum investment threshold that you must meet to establish an account, but many don't.
  • Account service fees: Some brokerages charge an annual fee for each fund if your balance doesn't meet a certain threshold. Waivers may be available.
  • Investment trade fees: Plan participants pay this fee, or commission, when they trade shares. There's a lot of variance for this fee, depending on the brokerage you use and the funds you trade. Advertised fees for ETFs that you trade online range from $4.95 to $19.95. However, if plan participants choose to trade over the phone or have a broker place the trade for them, this fee is higher. Participants can save money on this fee by choosing from the commission-free trades that many brokerage firms offer.
  • Advisor services (optional): Brokerages frequently offer management services for an extra fee. Usually this fee is a fraction of a percentage of the account balance, but some cost more than 1% of your assets. You may be required to meet account minimums to qualify for this service. However, most brokerages, even those that offer this service, provide complimentary access to brokers who can give your plan participants customized investment advice, helping them select funds and create a sound investment strategy.
  • Nonstandard or event-based fees: As with 401(k) plans, participants may pay various fees for things like withdrawing or transferring money out of their retirement accounts.

Buying Guide

Employee Retirement Plan Comparison

In our search for the companies with the best employee retirement plans, we knew we wanted to find providers that serve small business and offer quality plans that are affordable for both business owners and employees. We also wanted the plans to be easy to set up and manage. To this end, we looked for retirement services with the following features.

  • Services for small and very small businesses: Not every employee retirement plan provider works with small businesses. Some require you to have thousands or even millions of dollars in fund assets. We looked for services that work with businesses that have just a few employees and don't yet have any plan assets.
  • Fiduciary responsibility, where applicable: Small business 401(k) plans have strict federal regulations, so we looked for retirement plan companies that do the heavy lifting for you and provide plan administration, record-keeping, and advisory services as part of their offering and cost.
  • Pricing posted on company's website: This makes it easy for you to determine whether or not a plan is within your budget and saves you the time of calling the company for this information.
  • Competitive costs: We know that price is one of your top concerns about sponsoring a plan, so we looked for plans that have lower costs and fewer fees while still delivering a quality retirement product.
  • Patient customer service: Many small business owners haven't been plan sponsors before, and there's a lot to learn before making the decision to offer a workplace retirement plan. For this reason, we included customer service in our testing and considered how easy it was to get a rep on the phone, how willing they were to share their knowledge of retirement plans, and how patient they were in answering our many questions.

Types of Retirement Plans

There are several different types of 401(k) and IRA employee retirement plans that you can sponsor for your small business. Your accountant or tax advisor can help you decide which is the best option for your small business, based on your financial situation, number of employees and personal retirement goals.

401(k) plans: This is the most popular type of employee retirement plan because it has higher contribution limits for employees and offers a choice of pretax or Roth contributions. Plan varieties include traditional 401(k), safe harbor 401(k) and individual 401(k).

IRA plans: These plans usually have lower contribution limits than 401(k) plans but are also easier and less expensive to set up and maintain. Most brokerages offer both employer-sponsored IRAs and personal IRAs that can supplement workplace-sponsored retirement plans. Plan varieties include traditional and Roth IRAs, SIMPLE IRAs, and SEP IRAs.

Which Plan Is Right for You?

Here we've listed some factors that may help you quickly identify the type of retirement plans for small business that you want to learn more about. Before choosing a plan, be sure to consult your financial planner and tax advisor for advice specific to your business needs.

Consider the following plan types if you have employees and …

  • Want to make Roth contributions: traditional 401(k) and safe harbor 401(k)
  • Want to make higher contributions for yourself (and key employees, if applicable): safe harbor 401(k)
  • Prefer not to match or make contributions to employee accounts: traditional 401(k)
  • Want a basic plan that allow employees to contribute: SIMPLE IRA
  • Want a plan that doesn't require yearly contributions: SEP IRA

Check out these plan types if you don't have employees and …

  • Want a retirement plan that anyone can set up: traditional and Roth IRA
  • Want to maximize savings by contributing to your retirement plan as both an employer and employee: individual 401(k)
  • Want to maximize savings, but only want to make contributions as an employer: SEP IRA

Traditional 401(k)

This plan doesn't require employers to match employee contributions, but those who do are allowed to set a vesting schedule that encourages employees to stay with the company. 

Costs: For this plan, charges often include a one-time setup fee, monthly or annual administrative and per-employee fees, and an investment or advisory fee.


  • Employers are not required to match participant contributions.
  • Employer contributions are tax deductible as a business expense.
  • Employers may set a vesting schedule to encourage employee retention.
  • The contribution limits for employees are higher.
  • Employees can elect to make salary deferrals or after-tax contributions.
  • Contributing participants may qualify for the saver's credit on their income tax return.
  • Loans are available to plan participants.


  • The plan can be more complex to set up and administer.
  • It requires filing IRS Form 5500 (Annual Return/Report of Employee Benefit Plan).
  • It requires annual nondiscrimination testing to make sure the plan doesn't favor highly compensated employees.

Contribution structure and matching requirements: This plan allows optional contributions from both employees and employers.

  • Employee elective deferrals for 2019 are capped at $19,000, though catch-up contributions up to $6,000 are allowed for employees aged 50 and over. Employee contributions are 100% vested.
  • Employers aren't required to offer matching contributions for this plan, but if they do, they have the option to set a vesting schedule for their contributions. They may choose to contribute up to 25% of compensation for eligible employees. The total contribution limit for 2019 – including both employee and employer 401(k) contributions – is $56,000, or $62,000 for employees age 50 and over. However, this plan is subject to nondiscrimination testing, which may require the business owner and highly compensated employees to reduce their contributions.

Rules and deadlines: This plan can be established up to the last day of the initial plan year (usually Dec. 31). Typically, this type of plan is available to all employees age 21 and over who worked 1,000 hours or more in the last year. Participants can make withdrawals from this plan without penalty after age 59.5. Required minimum distributions (RMDs) begin the year the participant turns 70.5 years of age.

The following retirement plan companies offer traditional and Roth 401(k) plans for small businesses: ADP, ShareBuilder 401k, Guideline, Human Interest, Paychex and Vanguard. 

Safe Harbor 401(k)

Many small business owners favor this type of plan because it allows them and their key employees to maximize their own retirement contributions.

Costs: This type of plan often has a setup fee, administrative fees, per-participant fees, and an investment or advisory fee.


  • Employer contributions are tax deductible as a business expense.
  • It doesn't require annual nondiscrimination testing.
  • It has higher contribution limits for employees.
  • Employees may defer salary or make Roth contributions.
  • Contributing participants may qualify for the saver's credit on their income tax return.
  • Loans are available to plan participants.


  • It can be more complex to set up and administer.
  • It requires filing IRS Form 5500.
  • The employer must match or contribute to employee accounts.
  • It doesn't allow employers to set a vesting schedule.

Contribution structure and matching requirements: Employers must match or contribute to employee accounts. Employees contributions are optional.

  • Employee contribution limits for 2019 are $19,000. Catch-up contributions of up to $6,000 are allowed for employees aged 50 and over. Employee contributions are 100% vested.
  • Employer contributions are required for safe harbor 401(k) plans. They must match either 4% for participating employees or 3% for all eligible employees, and these contributions are immediately 100% vested. However, this plan type doesn't require nondiscrimination testing, so the business owner and highly compensated employees can maximize their contributions. Employers may contribute up to 25% of compensation. The total contribution limit for 2019 (including both employee and employer contributions) is $56,000, or $62,000 for employees age 50 and over.

Rules and deadlines: The establishment deadline for safe harbor 401(k) plans is Oct. 1. This plan is usually available to all employees, age 21 and older, who worked 1,000 hours or more in the last year. Participants may withdraw funds without penalty after age 59.5 but must begin withdrawing funds the year they turn 70.5 years of age to avoid being penalized with a 50% tax on the RMD.

The following retirement plan companies offer safe harbor 401(k) plans for small businesses: ADP, ShareBuilder 401k, Guideline, Human Interest, Paychex and Vanguard.

Individual 401(k)

This type of plan, also called a solo 401(k) or i401(k), is best for high-earning, self-employed individuals with no employees (apart from a spouse) who want to invest as much as they can into their retirement plans. It allows a sole proprietor to contribute as both employee and employer. 

Costs: The fees you pay for this type of plan vary by provider. Some have a setup fee, monthly or annual administrative fee, and an investment or advisory fee. Others don't charge a setup fee but have ETF and mutual fund expense ratios and charge for fund trades or have annual fund service fees (though these may be waived, depending on your account balance). Some also require a minimum opening deposit.


  • Employer contributions are tax deductible as a business expense.
  • There is a Roth (after-tax) option for employee contributions.
  • The contribution limits are high.
  • No nondiscrimination testing is required.


  • It can be more complex to set up and administer.
  • No loans are available from this type of plan.
  • It requires filing IRS Form 5500-EZ or 5500-SF when your account has more than $250,000 in assets.

Contribution structure and matching requirements: This plan allows self-employed individuals to make contributions as both the employee and the employer.

  • Employee contribution limits for 2019 are $19,000, plus a catch-up contribution of $6,000 for individuals aged 50 and over.
  • Employer contribution limits for 2019 are up to 25% of your self-employment income, with a total defined contribution limit (including both employee and employer contributions) of $56,000, or $62,000 for individuals age 50 and over.

Rules and deadlines: Individual 401(k) plans must be established by Dec. 31 or the end of the fiscal year. This plan type is only available to self-employed individuals with no employees (with the exception of a spouse who works for the business). As with nearly every retirement plan, you must be age 59.5 to withdraw funds without a tax penalty, and you must begin withdrawing funds at age 70.5 to avoid an expensive RMD tax penalty.

The following retirement plan companies offer individual 401(k) plans for small businesses owners: ShareBuilder 401k, Fidelity and Vanguard.

Traditional and Roth IRAs

This plan type isn't a workplace-sponsored retirement plan. Rather, it's designed for individuals and can be used in addition to workplace-sponsored retirement plans. 

Costs: Usually, there aren't any setup or administrative fees for the plan sponsor, but participants pay trading fees and fund expense ratios.


  • There are no setup or administrative costs.
  • It's easy to set up and maintain; it doesn't require tax filing or compliance testing.
  • Roth IRA funds grow tax-free and have no RMD.
  • Traditional IRA contributions may be tax deductible if you don't have a workplace-sponsored retirement account or if your modified adjusted gross income (MAGI) doesn't exceed certain limits.
  • It accepts rollovers from other retirement plans.
  • Contributing participants may qualify for the saver's credit on their income tax return.


  • Both traditional and Roth IRAs have low annual contribution limits.
  • Only one rollover per year is allowed, though there are some exceptions to this rule.
  • No loans are available from this type of plan.

Contribution limits: Whether you have a traditional or Roth IRA, the contribution limit for 2019 is $6,000. A catch-up contribution of $1,000 is allowed if you're age 50 or older.

Rules and deadlines for traditional IRAs: Traditional IRAs can be opened at any time, but contributions for the year must be made by the due date for filing your tax return (typically April 15 without extensions). Individuals with earned income above $6,000, or $7,000 for those over age 50, can contribute to a traditional IRA. However, there is an age limit for this type of account – those who are age 70.5 by the end of the year may not open a traditional IRA. You can withdraw funds without penalty after age 59.5 and must begin withdrawing funds the year you turn 70.5 to avoid a 50% RMD excise tax.

Rules and deadlines for Roth IRAs: Like traditional IRAs, Roth IRAs can be opened at any time, but annual contributions must be made by the tax filing deadline (April 15). There are some restrictions on the Roth IRA for high-income individuals, but there isn't an age limit. You must be age 59.5 to withdraw funds from your IRA without paying an additional 10% tax on investment earnings. Additionally, Roth IRAs must be held a minimum of five years before withdrawing funds. Unlike with most retirement accounts, you aren't required to withdraw funds as long as you live. After you die, your beneficiaries must begin withdrawing funds to avoid RMD fines.

The following retirement plan companies offer traditional and Roth IRAs to individuals: Fidelity and Vanguard.


A Savings Incentive Match Plan for Employees, also known as a SIMPLE IRA, can be set up by self-employed individuals and small business owners with 100 or fewer employees.

Costs: This plan usually has no setup fee and few administrative costs (some may be waivable). Participants pay trading fees and fund expense ratios. Optional advisor services may be available for an extra fee.


  • It's easy to set up and maintain; it doesn't require IRS 5500 tax filing or nondiscrimination testing.
  • Employer contributions are flexible.
  • Employer contributions are tax deductible as a business expense.
  • As with individual 401(k) plans, self-employed individuals with no employees can contribute to this plan as both employee and employer.
  • Contributing participants may qualify for the saver's credit on their income tax return.


  • Employers must match or contribute to employee accounts.
  • Employer contributions are immediately 100% vested.
  • Contribution limits are lower than with other types of workplace-sponsored retirement plans.
  • No loans are available from this type of plan.

Contribution structure and matching requirements: Employers are required to match or contribute to employee accounts. Employee contributions are optional.

  • Employees may contribute up to $13,000 in 2019. Those age 50 and over may also make catch-up contributions of $3,000.
  • Employers must either match up to 3% for participating employees or make a 2% contribution to all employee accounts. Those who choose to match can reduce their contributions to 1% in any two out of five years.

Rules and deadlines: SIMPLE IRAs must be established by Oct. 1. All employees whom you've paid at least $5,000 during previous years, or expect to pay this year, are eligible to participate in this type of plan. Plan participants may begin withdrawing funds at age 59.5 without paying a 10% additional tax. However, participants must hold the account for at least two years before making withdrawals to avoid a higher 25% additional tax. Participants must begin withdrawals the year they turn 70.5 to avoid a 50% RMD excise tax.

The following retirement plan companies offer SIMPLE IRA plans for small businesses: ADP, Fidelity and Vanguard.


Simplified Employee Pension Plans, commonly referred to as SEP IRAs, can be set up by self-employed individuals as well as business owners with employees.

Costs: There often isn't a setup fee for this plan. There may be administrative or service fees, though they may be waivable. Participants pay trading fees and fund expense ratios. Optional advisor services may be available for an extra fee.


  • Setup and administrative costs are low.
  • It's easy to set up and maintain; it doesn't require tax filing or compliance testing.
  • Employer contributions are tax deductible as a business expense.
  • Employers don't have to contribute to this plan every year.


  • Employers must contribute the same percentage of compensation for every participant.
  • Employer contributions have immediate 100% vesting.
  • Employees cannot contribute to this plan.
  • No loans are available from this type of plan.

Contribution structure and matching requirements: Employers can choose which years they contribute to employee accounts. Employees' retirement contributions are not permitted.

  • Employees are not allowed to make contributions under this plan. However, they can boost their retirement income by making contributions to a traditional or Roth IRA.
  • Employers must make contributions for all eligible employees, using the same salary percentage. For 2019, the contribution limit is the lesser of 25% of the employee's compensation or $56,000. Contributions are 100% vested.

Rules and deadlines: Although SEP IRAs are often thought of as a retirement plan option for small businesses, there's no limit on the size of business that can offer them. SEP IRAs must be established by your business's tax filing deadline (usually April 15, unless you've filed an extension). All employees who are age 21 or older, have worked for you for at least three out of the last five years, and have earned at least $600 during the year are eligible to participate in this plan. Participants may withdraw funds without penalty after age 59.5 but must begin withdrawals the year they turn 70.5 to avoid a hefty RMD tax.

The following retirement plan companies offer SEP IRA plans for small businesses: ADP, Fidelity and Vanguard.

The information presented in this article is general and is not financial, legal or tax advice. You should consult your CPA, financial advisor, or tax attorney for investment and retirement plan advice specific to your business and personal situation.

Retirement Plan FAQs

As a small business employer, why should I care about offering a retirement plan?

Sponsoring a retirement plan for your employees is a big step for a small business. Here are four factors to consider that can help you determine whether offering a retirement plan is strategically a good fit for your business.

1. It helps you attract and retain talent. As the country enjoys low unemployment rates and skilled workers are in high demand, offering a retirement plan as part of your benefits package helps you compete against larger companies to attract and keep top talent.

2. It gives you tax advantages. If you haven't offered a retirement plan before and have fewer than 100 employees, you may be eligible for the Retirement Plans Startup Costs Tax Credit. For the first three years of your plan, you're credited up to 50 percent of plan startup and administration costs, up to $500 per year. If you choose to match contributions, they're tax deductible. You may also be able to lower your personal income tax bracket by participating in the plan. You should consult your CPA or tax advisor to get information about the tax implications for your specific business as well as your personal finances.

Upcoming federal legislation may offer additional tax credits to small businesses that automatically enroll their employees in a retirement plan. It may ease other regulations as well, making it easier for small business owners to offer this benefit to their employees.

3. It helps you save for your own retirement. You're allowed to participate in the plan you sponsor, and you'll be able to save more money for retirement than if you set up a traditional or Roth IRA. Many small business owners choose the safe harbor 401(k) because it allows them to max out their own retirement contributions when they match or contribute to employee accounts. Again, you should speak with your CPA or financial advisor to find out how you can maximize your retirement savings under the plan you select for your business.

4. Your state may (soon) require it. Some states have passed, or are in the process of passing, legislation that requires businesses to either provide retirement plans for their employees or register with the state and allow employees to participate in a state-sponsored plan. Employers choosing the latter would be required to submit employee payroll contributions to the state, but as of this writing, they wouldn't be required (or allowed) to contribute to employee plans. They would, however, face penalties for noncompliance. They also wouldn't receive the tax credits for sponsoring a plan of their own.

California, Illinois and Oregon have already begun implementing such legislation in phases, starting with larger businesses. Small businesses will also be subject to this legislation. For example, California will require compliance from businesses with just five or more employees by June 2022.

Connecticut, Maryland and Massachusetts have passed legislation to form state-run plans. New Jersey and Washington plan to offer online marketplaces where small business owners can shop for retirement plans for their businesses.

How much will a retirement plan cost my business?

Costs vary, depending on how many employees will be participating in the plan, the type of plan you choose, and the retirement plan company (or companies) that you work with to help you run the plan. You should also consider whether or not you will match or contribute to employee IRA or 401(k) accounts.

How much can a small business owner contribute to a 401(k)?

For 2019, employees can contribute up to $19,000. Employees age 50 and older can make an additional $6,000 catch-up contribution. Contribution limits for employers cannot exceed 25% of the employee's compensation. However, the overall limit for a defined contribution plan that includes both employee-elected deferrals and employer contributions.


What to Expect in 2020

As in years past, we'll see an increase in maximum contributions to retirements accounts. Here's a sampling of 2020's contribution caps for retirement plans:

  • Employees may now contribute up to $19,500 – a $500 increase from 2019.
  • Catch-up contributions for participants age 50 and over are now capped at $6,500 – also a $500 increase from 2019.
  • The combined employer-employee maximum contribution is now $57,000 – a $1,000 increase from 2019. 

The biggest news in employee retirement plans for 2020 is the anticipated passage of the SECURE Act (Setting Every Community Up for Retirement Enhancement). Passed by the House earlier this summer, the bill has finally been sent to the Senate as part of a federal spending bill, where it is expected to be passed and sent on to the White House to be signed into law. It is expected to go into effect Jan. 1, 2020. Here are some of the changes to retirement plans that the bill includes: 

  • The Multiple Employer Plan provision makes it easier for small businesses to offer employee retirement plans by allowing them to band together, giving them access to better plans at a lower cost. It seeks to reduce the "administrative burden and fiduciary responsibilities of operating a plan" and gives employers a bigger tax credit for setting up a retirement savings plan, also rewarding them with an additional tax credit if they have a plan with automatic employee enrollment.

  • Employers with 401(k) plans will be required to offer a dual eligibility plan that allows long-term part-time workers to participate.

  • It allows workers over the age of 70.5 years to contribute to IRAs.

  • It delays the required minimum distribution (RMD) to age 72 – but this bill only applies to 2020 and beyond, so for those who have reached the age of 70.5 in 2019, the old rule still applies.

  • It removes RMD provisions for stretch IRAs. This means that non-spouse beneficiaries (such as children or other relatives) will no longer be able to stretch out RMDs over their lifetimes. Instead, they will only have 10 years after the account owner dies to cash out the fund. This won't apply retroactively, so it only applies to the beneficiaries of account holders who die "after the end of 2019."

  • It allows annuities to be included in 401(k)s. Annuities, which are already problematic, may become even more so, as the bill reduces the employer's fiduciary requirements to vet the insurance companies and their (often high-commission) products before including this investment option in the plans they sponsor.

May 2020: To help plan sponsors and beneficiaries affected by the coronavirus outbreak, the U.S. Department of Labor's Employee Benefits Security Administration has issued guidance on the EBSA Disaster Relief Notice 2020-01 that extends certain ERISA deadlines, such as for benefit statements and annual funding notices, so long as the plan administrator "makes a good faith effort to furnish the documents as soon as administratively practical." It also has guidance on temporarily relaxed loan and distribution rules – including rules for loan verification in accordance with the CARES Act – and offers relief from DOL enforcement action, "provided that plan fiduciaries act prudently and in the best interest of plan participants."

June 2020: In an informational letter, the U.S. Department of Labor stated that a 401(k) plan's fiduciaries may offer "a professionally managed asset allocation fund with a private equity component as a designated investment alternative for a participant directed individual account plan." It's important to point out that this doesn't mean that plan participants can directly invest in private equity investments – rather, a private equity investment may be a component of a "professionally managed asset allocation fund" – such as a target-date fund. 

Private equity investment options were already allowed in defined benefit plans (i.e., pensions), but were not allowed in defined contribution plans like 401(k)s. A November 2019 study from the Defined Contribution Alternatives Association and the Institute for Private Capital suggested that allowing this type of investment to be included as part of a professionally managed asset allocation fund would have "diversification benefits that lower overall portfolio risk."

Lori Fairbanks
Lori Fairbanks
business.com Staff
See Lori Fairbanks's Profile
Lori Fairbanks is a writer and editor for business.com and Business News Daily who has written about financial services for small businesses for more than seven years. Lori has spent hundreds of hours researching, analyzing and choosing the best options for critical financial-related small business services, including credit card processing services, point-of-sale (POS) systems and employee retirement plans. Lori's publishing experience is extensive, having worked as a magazine editor and then as a freelance writer and editor for a variety of companies.

Other Services Considered

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