Back to Menu
Connecting You To Opportunity
What can we help you find?
| Login|Sign Up
Back to Menu
Hello
  • Login
  • Sign Up

Fidelity Investments Review

ByLori Fairbanks,
business.com writer
|
Apr 09, 2019
Home
> Human Resources
SHARE THIS

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

Fidelity Investments

The Best Employee Retirement Plans of 2019

The Verdict

Fidelity Investments is the best SIMPLE IRA plan provider for small businesses because it has some of the lowest trade fees and provides complimentary access to advisors to help retirement plan participants customize their investment portfolios.

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.

Visit our best picks page to see all of our recommendations for employee retirement plans.

Pricing

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.

Features

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.

Drawbacks

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.

Editor's note: Need an employee retirement plan for your business? Click the Compare Quotes button below to have our vendor partners reach out to you with information.

SHARE THIS
Fidelity Investments

Fidelity Investments

The Best Employee Retirement Plans of 2019

The Verdict

Fidelity Investments is the best SIMPLE IRA plan provider for small businesses because it has some of the lowest trade fees and provides complimentary access to advisors to help retirement plan participants customize their investment portfolios.

Lori Fairbanks
Lori Fairbanks
See Lori Fairbanks's Profile
I write about financial systems and services for small businesses (such as accounting software, credit card processing and point-of-sale systems) for Business.com and Business News Daily.