Best Business Employee Retirement Plans of 2025

An employee retirement plan is a benefit that provides employees with a vehicle for saving for their retirement. Most employee retirement plans also include employer matching contributions, which offer additional payments into the fund up to a certain percentage of employee contributions.

There are several different types of employee retirement plans to choose from, but they generally involve an employee contributing a percentage of their income every paycheck. These contributions are usually invested and grow tax free on the market. In some cases, like with 401(k) funds, employees cannot withdraw funds prior to retirement age without incurring a penalty and paying taxes on their withdrawals.

Most retirement plans include employer matching contributions, which can boost an employee’s investment potential. For example, employers may offer a dollar-for-dollar match up to 3% of contributions to an employee’s retirement fund. In that case, if an employee’s paycheck is $1,000 and they contribute 5% of that paycheck ($50), the employer would match the first 3% of that payment for a total of $30 in matching funds.

Different types of retirement plans have their own rules, especially around how withdrawals are taxed. We’ll explore some of the most common types of retirement plans further below.

There are several 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.

Offering employee retirement plans can have significant benefits for a business, including the following.

Improved recruitment and retention

Employers who offer employee retirement plans generally have an easier time recruiting and retaining top talent. One study performed by international insurance advisory WTW suggests that 60% of workers consider their current retirement benefits plan an important reason they remain in their current role. That makes employee retirement plans an important part of attracting job candidates for open positions, as well as avoiding expensive employee turnover costs by keeping your existing team satisfied.

Improved employee morale

Offering employee retirement benefits can also keep your team engaged by boosting morale. An estimated 87% of people value employee retirement benefits, making them an important element of employee compensation. Employees with high morale who feel engaged are estimated to be 21% more productive than employees who aren’t — so offering employee retirement benefits may even pay off in the form of harder workers who get more done.

Reduced tax burden for employers and employees

Employee retirement benefits can reduce both your tax burden and your employees’. Employer matching contributions that are paid as part of your employee retirement plan can potentially lower company taxable income. Similarly, employee contributions to their plans reduce their taxable income as well, saving everyone money during tax season.

When you’re evaluating how much an employee retirement plan costs, you need to consider two sets of prices: your costs to sponsor the plan and your employees’ costs to participate in it. These costs vary by type of plan and provider. There are also tax incentives associated with some of these plans, which can lower your overall expenditures.

Tax Advantages of Offering Employee Retirement Plans

The government offers tax incentives to small businesses that sponsor retirement plans for their employees. As you calculate what it would cost to sponsor an employee retirement plan for your business, consult your accountant or tax advisor to determine which tax credits and deductions you’re eligible for and how they would affect your tax strategy:

• Eligible employers can claim a tax credit of up to $5,000 for three years for the costs associated with starting a SEP IRA, SIMPLE IRA or 401(k) plan. A tax credit reduces the taxes you owe on a dollar-for-dollar basis.
• The 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

A 401(k) plan used to be rare for small employers to offer, given the costs and complexity of complying with federal regulations. You needed a plan administrator, custodian, recordkeeper and financial advisor. Each of these parties charge fees; some are fixed while others are based on plan assets. Some companies offer multiple in-house services but charge extra for some of them. Sounds confusing? We think so too.

In our opinion, hiring multiple companies to handle different aspects of the same overall task 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 handle all the duties of an administrator, recordkeeper, custodian and advisor, 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 rely on 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, ETFs, target-date 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 can run the gamut from $50 to $130 per month, sometimes even higher. Some of the vendors we reviewed charge this fee 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 price is around $6 per employee per month. Usually, the employer pays this fee, but sometimes the employee (plan participant) pays it.
• Investment, advisory, custodian or other asset-based fees: Most companies charge some sort of asset-based fee that the plan participant pays. It ranges 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. All told, the average investment fees for 401(k) plans are around 1.65%.
• Termination fee: Every provider charges this fee, which is usually around $1,000, if you terminate your plan, although a few companies charge less. 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 401(k) plans 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): Small business 401(k) plan providers don’t offer this, but you’ll be required to have it when you sponsor an employee retirement plan. You should be able to get it from top liability insurance providers or your retirement services provider can recommend a source.

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 out for when setting 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 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 custom 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 actions like withdrawing or transferring money out of their retirement accounts.

Choosing the right employee retirement plan is critically important, but it can also be a complicated and difficult decision. Spend time evaluating each provider and the plans they offer, and don’t be afraid to bring in members of your team and outside professionals to support you during the selection process.

To understand the process even more, we spoke with business owners and leaders about how they went about choosing an employee retirement plan provider and the factors they prioritized along the way.

Determine whether you need a qualified or non-qualified plan

Qualified employee retirement plans refer to those qualified for special tax considerations and include familiar vehicles like 401(k)s. They are “qualified” under the Employee Retirement Income Security Act (ERISA) because they meet certain regulatory criteria.

Non-qualified plans are more flexible but do not offer the tax advantages that qualified plans do. They can be offered to a smaller group of employees and custom made to suit their needs. Qualified plans are offered to most employees in the company and come with an inflexible design.

“Identifying the purpose of the plan allows the ability to begin evaluating which type of plan is best suited for your needs,” said Adam D’Acierno, founding partner of Strategic Capital. “For example, a non-qualified plan will have different requirements for coverage and testing than a qualified plan which is more stringent in its requirements.”

Work with a reputable financial advisor

The ins and outs of employee retirement plans can be a lot to wrap your head around, so it’s wise to work with someone who understands the space already. We recommend working with a professional financial advisor who has a proven track record when it comes to managing employee retirement plans.

“The most important piece of advice I would give is to evaluate and identify an independent fiduciary advisor who can show a documented prudent process to help identify your needs, evaluate service providers, assist with implementation and ongoing monitoring of the plan is the most beneficial best practice to follow,” D’Acierno said. “They should be able to educate you at a plan level as well as the participants of the benefits involved in your company’s retirement plan.

Consider the type of plans available

There is a wide range of retirement plans to choose from, and even among certain types of plans there are variations (think traditional 401(k), individual 401(k) and safe harbor 401(k).) Spend time with a financial advisor analyzing all the types of plans and how they differ from one another. Make an educated decision based on the nuances of each plan available, and evaluate providers on whether they offer the best possible plan for your business.

“[We] recommend the company select what is called a ‘Safe Harbor’ Plan,” said Jim Cichanski, founder and chief human resources officer for Flex HR. “This is a 401K plan that contributes a certain match and will not need to do testing to ensure the highly compensated level of employees are meeting a percentage of savings of lower compensated employees. This also can save tremendous administrative time when doing the yearly audit of plans.”

Create a retirement plan advisory committee

An employee retirement plan affects the whole company, so it’s important to bring in the right voices to ensure you’re making an informed decision. D’Acierno suggested forming a retirement plan advisory committee that includes other stakeholders in the company, including employees who will invest in the plan.

“This committee normally has about three to seven members who have a level of expertise in finance, HR/payroll, or sit at executive levels,” he said. “It is important to note that the individuals responsible for making decisions for the plan are liable to the plan at a fiduciary level, so it is important for them to understand their responsibilities and for your company to provide levels of risk mitigation for those members.”

Cichanski recommended that the finance and HR departments be represented on this committee, as well as the CEO.

Thoroughly vet a provider before choosing them

Once you believe you’ve identified the right plan and right provider, put them to the test. Schedule multiple calls to ask detailed questions of company representatives, test their customer service and gather reviews from existing customers. Once you choose a provider, it’s not an easy process to switch, so do your due diligence on the front end to avoid an expensive and time-consuming hassle later.

“As you select a provider, talk to them many times and look at the customer service of that vendor. Check references out and key into the support provided by the vendor,” Cichanski said.

In our search for companies with the best employee retirement plans, we knew we wanted to find providers that serve small businesses 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 companies 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, recordkeeping and advisory services as part of their offering and standard cost.
• Pricing posted on the company’s website: This makes it easy for you to determine whether 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 relatively low costs and few 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 offering a workplace retirement plan. For this reason, we included customer service in our testing.

Four other providers you may wish to consider that scored highly with our reviewers are:

Vanguard

Vanguard offers savers access to hundreds of mutual funds and ETFs with an average fund expense ratio at Vanguard is 0.08%. This is much lower than the industry average of 0.44%. We also like that they charge no trading fees either. The funds they offer tend to perform well over time (however, bear in mind that past performance is not a guarantee of future performance). Employers can offer their staff a wide variety of retirement savings plans, including a SEP IRA, individual 401(k), small business 401(k) and SIMPLE IRA. We also like the absence of a minimum investment requirement as that lowers the barrier to entry for SMBs. Last but not least, employers will find managing their accounts easy thanks to the intuitive dashboard on Vanguard’s site.

Fidelity

Fidelity’s simple account fees for its 401(k)s and IRAs stand out from its competitors – the provider charges $500 for setting up your account and $300 per quarter thereafter. Employees pay just 0.125% on their account balance and $25 for bookkeeping each quarter. Fidelity also doesn’t charge commissions when participants buy or sell U.S. stocks, bonds, mutual funds or ETFs. If you’re self-employed, the company offers SEP IRAs meaning you have access to one of the most cost-effective ways to save for your retirement.

We love how straightforward setting up an account on Vanguard is together with the extensive knowledge base on the providers site that helps your plan’s participants understand each type of investment in greater depth so they can determine which are right for them.

Shelton

From the start, Shelton assigns you a dedicated account manager so you feel supported at all times. Importantly, the firm stays with you after the plan has been set up and your account manager is there to assist you with your questions if any issues arise. We love Shelton’s live customer support. The team is there when you need them, unlike many other providers that operate ticketing systems where you have to wait for a reply. The volume of information on the firm’s website is impressive and it will help educate both you and your staff about the world of retirement savings and planning. The firm will even come to your workplace to speak to your staff, if you think that will help improve participation rates.

Perfect 401k

What stops many SMB owners setting up a retirement plan for their staff are concerns about how long the process will take. Of all the providers we reviewed, Perfect 401k is perfect for simplifying and fast tracking the process. From the outset, a dedicated implementation team is there to simplify the process for you. They’ll help you design the plan for your company and prepare enrollment materials to distribute to your staff. We love how much control staff have over their own plans – they can choose fully-managed, guided or self-directed accounts for themselves. For those that want to take more charge of their portfolio, they can choose from up to 20 low-cost mutual funds and even open an account with the broker Charles Schwab. All together, these factors should ensure higher levels of participation in your plan across the business.

To determine the best employee retirement plans on the market, our team of HR experts and analysts evaluated an initial list of 23 plan providers. We compared these providers based on plan availability and flexibility, estimated costs and fees, and customer support.

After narrowing our list down to 10, we scheduled demos with provider representatives and asked them detailed questions about the plans they offered. Our experts and analysts studied each vendor’s administrative platform and evaluated their retirement offerings on more than 30 factors. We ultimately chose six services as our top recommendations.

These factors were weighted differently in our overall conclusion. The weights were determined based on how much business owners prioritize these criteria when shopping for business software and services and making purchasing decisions.

• Pricing (30%): Our experts and analysts compared and contrasted each vendor’s plans, judging which packages offered the best bang for your buck. They took into account monthly rates, per-employee fees, implementation costs, administrative charges and investment fees.
• Features (25%): We looked for standard retirement plan features like a variety of plan types to choose from, extensive investment options, an intuitive dashboard for employer and employee administration, and advisory services. We also assessed the available integrations and awarded extra points for advanced services, like AI-powered financial planning tools.
• Ease of Use (25%): We tested every retirement plan sponsor’s administrative software ourselves, gauging each platform’s learning curve, user-friendliness and customization options. We also considered how seamlessly the program worked with payroll software and whether there was a mobile app for retirement plan management on the go.
• Customer Service (20%): We evaluated the range of customer service options, including whether phone assistance was provided with all package tiers. We also examined each vendor’s online resources for businesses interested in self-guided help.

Based on these criteria, we not only determined which employee retirement plan providers our readers could trust but also the ways in which each vendor could best serve different business needs. Some plan sponsors and their software were better at certain tasks than others or more suited to a particular type of company. These takeaways informed the “Best for” use cases you see on this page.

To learn more about our methodology, see our full editorial process.