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ADP 401k Review

Table of contents.

adp 401k plan for small business

ADP is our choice for the best PEO/HRO for benefits administration. ADP’s HRO plans include various HR features. Additionally, ADP TotalSource is a comprehensive PEO with bundled HR features. Both provide an intuitive benefits administration process.

  • ADP offers a variety of employee retirement plans to meet all small businesses’ needs.
  • The retirement plans integrate with ADP’s popular payroll system, thus automating manual tasks and saving time.
  • The company has a mobile app that makes it easy for employees to enroll in their retirement plan, make changes and track their funds’ performance.
  • The vendor’s customer service includes a dedicated manager, which takes the complexity out of setting up a retirement savings plan for your staff.
  • ADP doesn’t list its prices on its website, making it hard to know how much the plan will cost your business without speaking to a company representative.
  • ADP doesn’t disclose its investment fees on its website, forcing you to contact the company for important cost information.
  • User reviews suggest ADP’s customer support may not be as great as promised.

It’s clear that ADP had all small businesses, from sole proprietors to 100-person organizations, in mind when developing its employee retirement plans. This plan sponsor understands that small businesses are unique and want retirement programs that meet their specific needs. When you partner with ADP, you can choose from a traditional 401(k), an individual or solo 401(k), a SIMPLE IRA, a safe harbor 401(k) and a Roth 401(k). Adding to the company’s appeal, ADP’s retirement plans integrate with its highly rated payroll services . In fact, this single vendor can handle virtually all of your HR needs. It doesn’t get any easier than that for time-crunched small business owners.

ADP Editor's Rating:

Why we chose adp as best for small businesses.

Small business owners don’t have excessive amounts of time to shop around for a retirement plan sponsor that meets their needs. They may find it easier — and safer — to go with a well-known brand like ADP that can offer a variety of plans and valuable features that can be customized. After all, a sole proprietor won’t want the same plan as a business with 100 employees. Thanks to its many attractive plan options, ranging from a traditional 401(k) to a SIMPLE IRA , ADP is capable of satisfying all types of small (and large) businesses.

ADP’s employee retirement plans integrate with the company’s popular payroll software, automating data entry and flagging any potential mistakes. This saves small business owners and their HR staff countless hours by eliminating the need to manually enter payroll and retirement information. When we researched retirement plan providers, we found in our review of Paychex that it was the only other vendor to offer a native integration with its payroll service. Other solutions, if they offer payroll integrations at all, require connecting products from two different companies (e.g., Human Interest’s employee retirement service with Gusto’s payroll service). By keeping everything in one unified system, business owners can streamline and improve their HR operations.

Among the other reasons ADP is the best retirement plan vendor for small businesses is the company’s customer service. Business owners have access to a dedicated account manager who can assist during implementation and beyond. Small business owners will also appreciate the company’s mobile app, which makes accessing plan information particularly easy for both employers and their employees.

If your business is just starting out, you should aim for a retirement plan program that can grow with your company. This is another aspect that makes ADP the best employee retirement plan provider for small businesses: You can start with the company’s solo 401(k) plan for yourself and roll it into a traditional 401(k) plan as you hire staff.

ADP retirement account dashboard

Plan participants can get a snapshot of their retirement account on their ADP dashboard. Source: ADP

Ease of Use

Small business owners don’t have hours to spend to set up an employee retirement savings plan; they need it to be quick and easy to implement and simple for employees to enroll in. The more hurdles there are, the less likely anyone is to participate. It’s apparent that ADP had these considerations in mind when it developed its user-friendly digital dashboard. With this portal, ADP makes it simple to set up a retirement plan for your staff by breaking down the process into easily digestible tasks you need to complete.

Our research also revealed how safe and straightforward ADP makes it to upload and store the documents that are necessary to establish your retirement plan. How-to videos and links to more help embedded in the company’s dashboard are other features we like. Most small business owners aren’t retirement plan experts; they need fast access to assistance and comprehensive information at their fingertips. In addition to an easy-to-use dashboard and its built-in resources, ADP gives small business owners access to a dedicated account manager to make sure everything runs smoothly for your organization.

If you want a retirement plan that’s easy to implement and manage — with a digital dashboard, a mobile app and access to dedicated support — ADP is the ideal solution for your small business.

ADP retirement intuitive dashboard

ADP’s intuitive dashboard makes it easy to get your small business’s employee retirement plan up and running. Source: ADP

Features and Services

ADP’s retirement plans come with a range of services and features that small businesses will value regardless of how many employees they have.

Fiduciary Services

ADP serves as your fiduciary for both administration and plan management for the company’s 401k Essential plan. If you select the regular 401(k) plan, someone at your business will need to be responsible for all the administrative and managerial tasks. The smaller your business, the more that option might make sense, because the fewer employees you have, the less there is to manage.

Advisory Services

We like how ADP provides advisory services to reduce the risk small businesses face when selecting investments for their retirement plans. For ADP’s plans that work with an adviser, third-party company Mesirow offers co-fiduciary or investment management services. Otherwise, ADP Strategic Plan Services provides fiduciary and investment services.

Implementation Services

ADP empowers you and your HR leaders with access to useful technology and tools that help you get your business’s retirement plan up and running. The vendor also has a team of dedicated managers to help with implementation.

ADP Payroll Integration  

With ADP’s SMARTSync tool, you can integrate your retirement plan data with ADP’s payroll software, thus eliminating manual entry and reducing potential errors. This is vital for saving time and increasing accuracy. Learn more in our ADP payroll review .

ADP retirement SmartSync

ADP’s SMARTSync tool makes it easy to integrate payroll information with your employee retirement plan. Source: ADP

ADP handles regulatory compliance, including trustee services, ERISA bond, and Form 5500 completion and filing. In our view, this service adds immense value, since most small business owners aren’t well versed in the laws and regulations surrounding employee retirement plans.

We were impressed with how easy ADP’s mobile app makes it for employees to enroll in your business’s retirement plan. After the team member answers a few questions about their annual income, retirement age and location, the app offers a personal savings target and suggested savings amount to achieve that goal. Once enrolled, employees can conveniently take several actions via the mobile app, including the following:

  • Transfer money into their retirement account
  • Rebalance investments
  • Request a loan
  • Check account balances
  • Review rates and returns
  • Make changes to investment choices

ADP retirement mobile app

With ADP’s mobile app, employees have access to their retirement account information no matter where they are. Source: ADP

Retirement Planner

We appreciate that ADP makes it simple for employees to plan for retirement and track their financial goals. The company’s Retirement Readiness calculator, for example, estimates how much money they’ll need for retirement based on their lifestyle goals and how well they are tracking toward those goals. It’s a fairly effortless way for workers to stay engaged in their financial planning and contribute to their future success.

ADP retirement calculator

ADP’s Retirement Readiness calculator helps employees plan for retirement. Source: ADP

ADP offers a variety of plans for every size business that may be interested in not just 401(k) plans but also SIMPLE IRAs and SEP IRAs. While the company’s website is very transparent about the features available with each type, what you won’t find are guaranteed prices. Rather, the site has a tool that lets you “estimate your baseline cost” for the 401k Essential option based on a $150 monthly fee, an additional $4 per employee per month, and a $20.83 investment service fee.

To get a more exact quote, as well as pricing information for the other available plans, you’ll need to contact the company. This is an added step that some rivals don’t require. For instance, see our review of USA 401k for a plan provider that shares all of its costs upfront.

When you contact ADP, you’ll also want to inquire about any setup fees. If you’re already using ADP for payroll or other HR services, you may be entitled to special pricing for adding employee retirement plans to your package. Bundling is often a great way to save money.

Implementation/Onboarding

ADP makes it easy to establish a retirement plan for your business, especially with a team of implementation managers at your disposal. The company even has English and Spanish language assistance, which opens up the program to more business owners. With the help of this support staff, your business’s plan can be established the very same day you ink a deal with ADP.

If you’re a business owner rolling over an existing retirement plan, the Document tab in the ADP portal clearly outlines what forms you need to fill out. The Communication tab lets you know if your employees have been notified of the plan, while the Activate tab tells you when your HR staff will be trained on the plan and when payroll is set up. We like that the dashboard also includes target dates to keep you on track with your plan implementation. Another great feature is that once the system is launched, employees can enroll on demand and employers can send a text to each staffer for text-to-enroll capabilities that encourage participation. 

Customer Service

ADP provides business owners with a lot of personalized customer service, which is one reason it’s our best pick for small businesses. When you work with ADP, you have access to a dedicated team that will help you implement and manage your retirement plan. To get support, all you need to do is call the retirement services participant service team at 800-695-7526. Agents are available Monday through Friday from 7:30 a.m. to 10:00 p.m. ET. Notably, those are longer support hours than most competitors offer.

We found a lot of helpful information directly on ADP’s digital dashboard. Additionally, the ADP website has a resource center, including sections specifically for small businesses; answers to frequently asked questions; a blog; and webinars.

ADP has been in business for over 70 years and has a strong reputation in the marketplace. It sports an A+ rating with the Better Business Bureau (BBB), but similar to Paychex, it has a rather low customer review score: 1.05 out of 5 stars. That’s surprising and disconcerting given all the support ADP promises to provide.

Limitations

ADP is a top employee retirement plan provider for small businesses, but one limitation in particular gave us pause: the company’s lack of transparent, upfront pricing. Busy small business owners want to know how much a plan costs from the beginning, and ADP doesn’t provide that information online. Although the vendor is only a call away, we prefer that plan sponsors list pricing on their websites. The more information a small business owner has from the start, the more informed a decision they can make for their organization.

Another potential downside is the poor customer reviews on the BBB website, which notes that ADP has closed nearly 900 complaints in the past three years. If you’d rather not have to rely on customer support, you may want to check out our review of ShareBuilder 401k , which we found to be a great option for business owners who are interested in a do-it-yourself employee retirement plan solution. Going it alone could be better than dealing with subpar or inconsistent customer support.

Take the time to call ADP to get a specific quote if you are seriously considering the vendor for your retirement plan. Yes, it’s an extra step, but it’s the only way you’ll know precisely what the plan will cost you and your employees so you can accurately compare the costs with those of competing plan providers.

Methodology

During our investigation of the best employee retirement plan providers, we compared and contrasted the companies based on their plan types, features and services, pricing, usability, setup, integrations, customer support and drawbacks. To determine the ideal plan sponsor for small businesses in general, we looked for those that kept costs and investment fees low, made it easy to implement and manage the plan, and offered mobile tools to boost enrollment and engagement rates.

We also wanted a vendor that leads with technology but is capable of offering dedicated one-on-one service. We vetoed any plans that were hard to understand, would take a lot of time and effort to implement, and would be time-consuming to manage. Small business owners aren’t experts at creating retirement savings plans; many need the help of a reputable plan provider. Furthermore, small businesses need the same access to investment advice and research as larger enterprises. For these reasons, ADP stood out to us as the best solution for small businesses.

What type of employee retirement plans does ADP offer?

ADP offers many types of employee retirement plans, including traditional 401(k), individual or solo 401(k), SIMPLE IRA, safe harbor 401(k) and Roth 401(k).

How does ADP’s payroll system integrate with the company’s employee retirement plans?

ADP’s payroll system integrates with the company’s employee retirement plans by connecting your data sets through the vendor’s SMARTSync tool. This eliminates the need for manual data entry, automatically flags potential errors and saves small business owners valuable time by streamlining recordkeeping. SMARTSync works with certain ADP payroll and all-in-one HR solutions, including RUN Powered by ADP and ADP Workforce Now.

Bottom Line

We recommend ADP for …

  • Small business owners who want to keep their payroll information and retirement benefits in one system.
  • Business owners who want to offer their employees enrollment and plan access via a mobile app and an online dashboard.
  • Small business owners who want personalized attention when implementing an employee retirement plan.

We don’t recommend ADP for …

  • Small business owners who don’t want to integrate payroll services with their employee retirement program.
  • Business owners who need to know upfront how much an employee retirement plan will cost.

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7 Top 401(k) Providers for 2022

Sally Lauckner

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

Table of Contents

How to choose a 401(k) provider

7 best 401(k) providers for small businesses.

Regardless of your business’s size, offering your employees a retirement savings plan is a crucial part of any HR operation. The key is to choose a 401(k) provider that is specially equipped to provide small businesses with quality retirement plans, investment advisory services and administrative support.

There are a few retirement plans available for self-employed and small businesses, including SEP-IRA, SIMPLE IRA and individual 401(k) plans, but traditional 401(k) plans are by far the most common option. Traditional 401(k) plans allow participants to make pre-tax contributions to an individual retirement account up to the limit set by the IRS. Employers can also choose to make contributions on behalf of their employees, match their employees’ contributions or both, also up to the IRS limit.

In this guide, we’ll go over seven of the best 401(k) providers for small businesses and walk you through how to go about choosing the best 401(k) provider for you and your employees.

» MORE : NerdWallet's best HR software for small businesses

You’ll first need to choose the firm that provides the type of retirement plan you really want to offer, whether that’s a traditional 401(k) plan or something else. Also take a look at the plan design to ensure that their eligibility requirements, vesting schedule, investment options and other details are appropriate for your employees. You’ll also need to evaluate the fees attached to your retirement plan. Often, fees vary depending on your business and the number of employees, so you will need to get in touch with each provider directly to receive a quote.

On a qualitative level, you’ll likely want to work with a 401(k) provider with excellent customer service, individualized investment and plan design guidance and a support team that’s easy to reach — especially because the landscape of retirement plans can be confusing to navigate, both for you and your employees.

Moreover, you should consider a provider that acts as a fiduciary advisor. Fiduciaries are legally and ethically bound to provide unbiased investment advice that aligns with their clients’ best interests. They also manage, monitor and adjust their clients’ retirement plans. There are several types of fiduciaries, but you’ll most often see the term 3(38) fiduciary.

Also note that a couple of the 401(k) providers in this round-up are online-based, which is a great option if you’re looking to really streamline and digitize this process. Certain providers can offer employer benefits beyond 401(k) plans, as well, which is a good option if you want to integrate all your fringe benefits under one provider.

Here are seven of the best and most reputable 401(k) providers for small businesses that you should consider in 2022.

ADP is one of the most respected names in payroll processing, but their comprehensive HR and employer services suite includes retirement plans and administration. While they can serve businesses of all sizes, ADP is unique in that they extend their full arsenal of services and decades’ worth of expertise to small businesses (which they define as businesses with one to 49 employees), in addition to large enterprises.

If you sign up for ADP’s retirement planning service, you’ll have access to a team of professionals who can help you browse, choose and customize which of their available retirement plans is best for you and your employees. In addition to 401(k) plans, ADP offers SIMPLE and SEP IRA options, which are great choices for very small businesses. They also offer tiered investment options, which are suitable for investors with all experience levels.

Once they’ve helped you design a retirement plan, your ADP advisors will help you implement and manage your plan to ensure you’re staying compliant. If you’re an ADP payroll client, your retirement plan’s record-keeping system will automatically integrate with your payroll system.

2. Betterment for Business

Betterment for Business is the 401(k) channel of Betterment, a robo-advisor that helps consumers make smarter investment choices using a combination of technology and human expertise. With this service, Betterment for Business’ human advisors and technology help business owners design 401(k) plans and advise employees on the smartest investments they can make in a variety of ETFs to optimize their retirement savings. Betterment for Business is a certified 3(38) fiduciary, so they’re legally and ethically required to act in your company’s best interests when giving investment advice.

Obviously, Betterment for Business is only a viable option if you and your employees are comfortable using a robo-advisor and managing your plan digitally. If you are interested, we’d recommend taking a look at our Betterment for Business review for a more in-depth understanding of this unique 401(k) provider.

3. Charles Schwab

Charles Schwab is one of the most established and best-known investment and retirement firms in the country — a better option if you consider yourself a bit too much of a technophobe to opt for a robo-advisor. Charles Schwab offers a managed account service that offers your employees personalized advice on a range of investment options, including ETFs or index mutual funds.

They’ll also provide ongoing account monitoring and automatic adjustments. As an alternative, Charles Schwab also offers SIMPLE and SEP IRA plans; or, if you’re self-employed, you can opt for their Individual 401(k) plan, which is essentially a traditional 401(k) plan designed particularly for individually owned businesses. It’s worth noting that this plan has no setup or monthly maintenance fees.

4. ShareBuilder 401k

Sharebuilder 401k allows self-employed individuals and small businesses to buy and set up low-cost 401(k) plans completely online. They also act as 3(38) fiduciaries, so they’re certified to make investment advice, manage portfolios, and handle plan administration.

With Sharebuilder 401k, you’ll have four retirement plan options: Solo 401(k), Safe Harbor 401(k), Traditional 401(k) and Tiered Profit-Sharing 401(k). All plans require a one-time setup fee, a flat monthly administration fee and an annual fund fee that varies from 0.04% to 0.39% per year. Investment options include index ETFs and five types of model portfolios based on the individual investor’s risk tolerance.

5. Fidelity Investments

Another trusted name in retirement services, Fidelity has over 30 years of experience and currently over 30 million plan participants under their belt. Fidelity can service businesses of all sizes, but they say that 86% of their business clients have fewer than 500 employees — so despite the big name, they’re fully equipped to serve small businesses.

Fidelity’s 401(k) plan offers a wide range of investment options, including over 16,000 mutual funds from 380 fund companies. They also offer comprehensive advisory services, as well as administrative, reporting and compliance support, and you can reach their advisors either in person, online or over the phone. Their advisors will help you design a plan or you can choose to work with your current broker. Plus, Fidelity has an app and online dashboard where you and your employees can view and manage their plans and get in touch with advisors whenever they need. Beyond retirement plans, Fidelity also offers integrated employer benefits, including payroll and health plans.

6. T. Rowe Price

At 83 years old, T. Rowe Price is the most established asset management firm on this list. They offer four retirement plans for small businesses: SEP-IRA, SIMPLE IRA, Individual 401(k) and a 401(k) for Small Business. The former three plans are best for self-employed individuals or businesses with under 100 employees, while the latter plan is best suited for businesses with up to 1,000 employees.

Under the 401(k) for Small Business, plan sponsors can choose from over 100 no-load mutual funds and over 5,400 non-proprietary funds. T. Rowe Price also offers plan participants 24/7 phone support, plus an online portal where they can manage their plans and conduct transactions.

7. Merrill Edge

Under the Merrill Small Business 401(k) plan, independent advisors select and manage funds and model portfolios for all participants. Unlike the other participants on this list, pricing for this plan is very transparent: It costs a one-time setup fee of $390 and a monthly administration fee of $90. Then, each participant is responsible for a $4 monthly recordkeeping fee and an annual asset-based fee of 0.52%. You also have the option of converting your existing 401(k) plan to a Merrill Small Business 401(k), in which case you may end up saving money.

Merrill Edge’s Merril Small Business 401(k) is suitable for corporations, partnerships and nonprofits, but they also offer SEP-IRA, SIMPLE IRA and Individual 401(k) plans for sole proprietorships and self-employed individuals.

» MORE: NerdWallet's best small-business apps

This article originally appeared on Fundera, a subsidiary of NerdWallet.

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American Funds

Betterment for business, charles schwab index advantage, edward jones, employee fiduciary, fidelity investments, merrill edge, sharebuilder 401(k), t. rowe price, the bottom line.

  • Retirement Planning

Top 10 Small Business 401(k) Plan Providers

adp 401k plan for small business

Historically, small employers have steered clear of offering 401(k) plans , seeing them as complicated to establish and costly to administer. The rules for running a plan properly are admittedly complex. But increasingly, 401(k) management companies are helping to make the task easier by providing plans geared to the little guys of the business world.

If you are a small business owner considering initiating a 401(k) plan for your employees (and yourself), here are ten of the top retirement plan providers. They not only offer affordable plans but can act as administrators and investment fiduciaries—relieving you of the headache-inducing homework that comes with any plan.

Key Takeaways

  • Companies large and small that want to offer their employees 401(k) retirement plans have several options these days to easily and efficiently get one up and running.
  • With many providers to choose from, costs have dropped dramatically, along with added services like plan administration and payroll common.
  • Here we list ten of the top 401(k) plan providers that serve small businesses.

ADP's 401(k) plans offer investment options from more than 300 investment managers.   Three investment line-ups are available for participants, based on their familiarity with investing and financial assets.

In addition to retirement plans, ADP specializes in payroll , tax filing, HR , insurance and administrative services. ADP’s small business division (1 to 49 employees) provides integration of payroll and recordkeeping with 401(k) plans, an important benefit for small employers.  

Employees with existing 401(k) accounts have the option to transfer those plans into the new plan, and a mobile app lets employees check their retirement accounts from their smartphones and other devices.

With more than 360,000 retirement plans overall, American Funds provides 401(k) account options that can be tailored to any size company, including startups and those that have recently merged or made acquisitions.  

Their plans include both traditional and Roth versions.   Investment choices can be objective-focused (preservation, balance, and growth) or individual mutual funds. 

A newer player, Betterment for Business started offering its 401(k) plans to smaller businesses in 2016.  

As a robo-adviser , Betterment addresses many of the cost issues associated with the administration and management of a company 401(k) plan by using proprietary algorithms. In addition, Betterment says it eliminates fee hiding by using  exchange traded funds (ETFs). 

Schwab designed its Index Advantage 401(k) plan to “lower costs, simplify investing and help workers better prepare for retirement,” to quote the company literature.   The key is in the title: The plan uses index mutual funds or exchange traded funds (ETFs) with low operating expenses instead of actively managed mutual funds. Schwab claims operating expense savings by as much as 82%.  

Plans have no annual fees and participants get full access to all of Charles Schwab’s brokerage and banking services, including an interest-bearing, FDIC -insured savings account through Schwab Bank.

Automatic enrollment is available and employees can get help or use a self-directed brokerage account .

Edward Jones offers small employers a variety of options when it comes to investments in its 401(k) retirement plans.   They include stocks, bonds, mutual funds, and government securities .

The company offers education and administrative support to both business owners and employees. After the plan is established, employees can review their accounts online or through mobile apps made available by Edward Jones. 

Employee Fiduciary comes out of the gate offering to let business owners compare their current providers’ 401(k) fees to Employee Fiduciary fees. And indeed, Employee Fiduciary has very low fees. It costs just $500 to start a new plan or $1,000 to convert an old one.   Small employers pay $1,500 a year for up to 30 employees plus 0.08% of assets under management .

Employees have access to 377 mutual fund families (including Vanguard), all available ETFs and even a brokerage window through TD Ameritrade .  

Despite its low fees, Employee Fiduciary offers all the services of a full-price provider: tax return forms, annual report summaries, and benefit statements.

Fidelity Investments has consultants to help business owners select a plan and then, once the plan is established, provides access for employees and owners via the internet.   The company also offers a mobile app that allows employees to monitor their individual accounts.

Employees can transfer old retirement accounts into their new 401(k). Fidelity provides integration with payroll services, an advantage for small-business owners, as well as the full roster of services (plan administration, record-keeping, trading, and investment advisory).

Merrill Edge lists streamlining, convenience and affordability as key advantages to its small business 401(k) plan.   Also included are the usual benefits— tax deductions for the employer, investment fiduciary support, and educational support for employees.

With an annual asset-based fee of 0.52%, Merrill boasts pricing that is lower than many competitors.   Its plan includes online account management—a common feature in most 401(k) plans. An automatic enrollment option, as well as a Roth 401(k) option, are also available. Employers have the flexibility to contribute on a year-to-year basis.

ShareBuilder 401(k) has retirement plans specifically designed for small employers. There are four different 401(k) options—individual, simplified, customized, and tiered profit sharing.  

Each plan has distinct matching, vesting , and profit-sharing options and once the plans are established, employees are able to transfer existing retirement accounts into their new 401(k) account. In addition, ShareBuilder retirement plans integrate with the majority of payroll providers. 

Advertising its small business 401(k) plans as appropriate for companies with fewer than 1,000 employees, T. Rowe Price says it offers a “cost-effective structure” for both sponsors and participants.  

Investment options include a range of T. Rowe Price and non-T. Rowe Price investments. There is a plan sponsor resource center as well as 24/7 website access for participants. Sponsors may select from more than 100  no-load mutual funds  and common trusts as well as over 5,400 non-proprietary funds. 

Of course, nothing replaces due diligence and good old-fashioned homework when it comes to checking out various 401(k) plan providers. Make sure you ask enough questions and more important, the right questions when considering a 401(k) plan for yourself and your employees.

ADP. " ADP Advisor Access: Dedicated to Your Success ."

ADP. " Design a Better 401(k) Retirement Plan ."

Capital Group American Funds. " Employers & Plan Sponsors ."

Capital Group American Funds. " 401(k) Retirement Plans ."

Betterment. " Betterment for Business: The Best 401(k) for Employers and Employees ."

Charles Schwab. " Charles Schwab Launches Unique 401(k) Plan Solution Designed to Address Barriers to Retirement Saving and Investing ."

Charles Schwab. " A Unique View on the 401(k) ."

Edward Jones. " 401(k) Plans for Your Employees ."

Employee Fiduciary. " Employee Fiduciary 401(k) Fees are Low and 100% Transparent ."

Employee Fiduciary. " Low Cost 401(k) Investments ."

Fidelity Investments. " 401(k) for Small Businesses ."

Merrill Edge. " Small Business 401(k) ."

Merrill Edge. " How Does Your Plan Compare? "

ShareBuilder 401K. " Simple, Low-Cost Business 401(k) Plans ."

T. Rowe Price. " Small Business 401(k) ."

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For more options, check out the rest of Business News Daily’s picks for the The Best Employee Retirement Plans for Small Businesses 2024.

ADP Employee Retirement Review

Table of contents.

adp 401k plan for small business

ADP offers small businesses a variety of employee retirement plans. Integration with its payroll software, strong customer service and a hand-holding customer service approach makes it our best pick for small businesses.

  • ADP offers a variety of investment options and retirement account types appropriate for businesses of all sizes.
  • The 401k Essential plan offers transparent pricing and full-service retirement plan administration.
  • The company offers a comprehensive suite of payroll, HR, and benefits tools and services.
  • ADP does not disclose fees for services other than its 401k Essential package.
  • The 401k Essential plan may be cost-prohibitive for businesses already equipped to administer retirement plans in-house.
  • ADP is primarily known as a large payroll company.
  • The company offers employee retirement benefits suitable for any small business.
  • ADP’s 401k Essential plan offers transparent pricing and full-service plan administration.
  • This review is for small business owners and HR professionals who are considering ADP as their employee retirement provider. 

Many businesses want to outsource the management of their employee retirement benefits to a company that has the expertise and resources to take the burden off of employees. The best employee retirement service providers are equipped to do just that, and ADP is a great example.

ADP is a large, established payroll services company that provides retirement benefits through an all-in-one platform. The company also offers employee retirement benefit accounts. It can be a cost-effective and easy-to-use solution for businesses of all sizes.

ADP Employee Retirement Editor's Rating:

Why adp is best for small businesses.

If your business has employees, it’s usually a good idea to use an independent payroll services provider. Whether you already use ADP or still need a payroll provider, it’s an easy way to streamline payroll, retirement and health benefits. The 401k Essential plan makes it easier to offer an employee retirement plan by simplifying employee account setup and maintenance, and ADP Run is a cost-efficient payroll option as well. The brand is undoubtedly one of the best employee retirement plan providers .

ADP Retirement Plan Features

ADP offers employers a 401(k) retirement plan that puts the company administrator in charge of selecting and monitoring investments over time. Plan administrators get access to a specialized ADP manager to help with implementation, as well as technology and tools that assist in building, implementing and administering a companywide 401(k). ADP’s 401(k) plan can also be synced with the ADP payroll software and ADP HR outsourcing tools through SMARTSync Comprehensive Plan Automation.

While this may be a good option for very small businesses with investing and recordkeeping experience, managing a retirement plan can be extremely overwhelming for larger operations. These companies may fare better with ADP’s 401k Essential plan.

401k Essential

ADP’s 401k Essential plan offers a full-featured 401(k) with additional assistance with administration and compliance. The plan is also fully customizable, making it easy to adjust every aspect of the plan to meet the needs of your business. This includes tailored automatic enrollment options, employee eligibility requirements, employer contributions, vesting schedules and safe harbor plans.

Because of the efficiency and peace of mind that come with these added services, ADP’s 401k Essential plan is a great fit for large businesses seeking efficiency and automation. It’s similar to the fully managed plans that ShareBuilder 401k offers, though often more expensive. In fact, ShareBuilder 401k is our top pick for low fees; read our ShareBuilder 401k review for more information.

Additional Features

  • Onboarding and support: Every ADP plan administrator gets access to a specialized ADP manager who helps with retirement service implementation. This service is on par with most employee retirement vendors.
  • Automation: ADP’s SMARTSync Comprehensive Plan Automation lets current ADP payroll and all-in-one HR clients integrate their payroll system with 401(k) plan recordkeeping systems. Administrators can use this feature to save time, improve accuracy and reduce the risk of compliance oversights.
  • Investment manager services: Companies can opt to work with financial services firm Mesirow to get co-fiduciary or investment manager services. Alternatively, ADP’s affiliate, ADP Strategic Plan Services LLC, can assist with investment fiduciary services. Either option can take the pressure of selecting and monitoring investments off your business’s HR team and reduce the risk of being audited by the IRS or the Department of Labor.
  • Compliance: ADP provides independent recordkeeping services to help your business stay on top of compliance requirements without the risk of bias. Its automation tools also reduce the risk of compliance-related errors, and the 401(k) Essential plan includes compliance readiness and testing, as well as government filings.
  • Online resources: ADP customers have access to a large library of online resources to help with plan administration, tax and compliance requirements, and investment decisions. Because ADP is a full-service HR platform, there are also resources related to payroll, recruiting and hiring, and other types of employee benefits .
  • Mobile app: The ADP mobile app makes it easier for employees to enroll. The integrated MyADP Retirement Snapshot calculator also lets employees calculate their retirement savings and plan for the future. On this front, ADP wins over ShareBuilder 401k, which entirely lacks a mobile app.
  • Employee tools: In addition to accessing ADP’s mobile app, employees can take advantage of the ADP Achieve employee education resources and financial wellness program. The company also leverages its employee records data to offer plan participants personalized insights and benchmarking so they can make smarter investment decisions.

ADP offers a variety of services in addition to employee retirement benefits. Consider using ADP if you also want to take advantage of the company’s other offerings, such as payroll services.

Account Types

Businesses that choose ADP as their employee retirement benefits provider can select from a few types of employee retirement plans. Each plan has its own rules and regulations, as determined by the IRS.

  • 401(k): ADP offers a 401(k) plan wherein plan administrators must select and monitor investment options and handle compliance-related issues. Business owners can also select the 401k Essential plan, which includes more substantial customization, administration and compliance support.
  • SIMPLE IRA: With administration fees as low as $480 per year, ADP’s SIMPLE IRAs involve less paperwork and fewer compliance requirements than a 401(k) plan. There are also no minimum requirements for participation. Notably, ADP’s main name-brand competitor in the HR services and benefits space, Paychex, also offers SIMPLE IRAs.
  • SEP IRA: A SEP IRA through ADP is designed for small business owners and self-employed individuals who want flexible contribution amounts and no required compliance filings. This gives ADP an advantage over Human Interest, which doesn’t offer retirement plans for solo business owners and entrepreneurs. That said, Human Interest is our top pick for affordability; read our Human Interest review to learn why.

Investment Options

Companies that offer employee retirement plans through ADP get access to a wide selection of investment options, including the following:

  • Money market
  • Stock and income mutual funds
  • Index funds and lifestyle funds
  • Specialty funds, including real estate and technology
  • Socially responsible equity funds
  • Treasury Inflation-Protected Securities (TIPS) bonds

While ADP offers most of the typical investment options available in employer-sponsored retirement plans, the list of individual funds is relatively short. We felt that other retirement vendors we reviewed, such as Human Interest and USA 401k, were more transparent about the investment options they offer. It’s also unclear whether ADP allows companies to offer employee stock purchase plans through their retirement accounts.

ADP does not publish its pricing online for some of its services. The two services for which it does list prices are 401k Essential and, to a lesser extent, SIMPLE IRA.

For 401k Essential, the base monthly fee is $150, with an additional fee of $4 per participant. On top of that, ADP charges 0.10% of eligible assets as an annual fee for investment management services. The minimum you must pay for this fee, which is billed monthly, is $20.83 per month. These prices are about on par with, if just a touch more expensive than, some competitors’ prices.

For SIMPLE IRAs, the ADP website indicates that administrative fees start at $480 per month. This is the only pricing information given for this type of employee retirement plan.

Outside this, in general, ADP prices vary based on plan customizations. If your business already uses ADP for payroll and other HR services, contact your account representative to learn more about ADP’s retirement plan pricing. You can also get a quote via telephone or by navigating to Start Quote from the homepage.

If you prefer more transparent pricing from your employee retirement vendor, USA 401k may suit you better. Read our USA 401k review to learn why this brand is our top pick for transparency.

Ease of Use

Even though pricing is not disclosed on ADP’s website, it’s easy to build a plan and get a quote. Just click the Start Quote button on ADP’s website and provide contact information and relevant details about your business. Once your request is submitted, an ADP representative will contact you to schedule a consultation. You can also get a quote by calling the company.

Once you sign up for ADP’s retirement benefit services, you can automate a number of tasks through the SMARTSync Comprehensive Plan Automation tool. You will also be assigned a specialized ADP manager who will help streamline the setup and implementation. Customizations and implementation assistance are even more robust with the 401k Essential plan, which includes administrative fiduciary support, investment management support, compliance readiness and testing, and government filings.

From the employee perspective, ADP’s mobile app makes it easy to enroll in 401(k) benefits and to change investments, while the Retirement Snapshot calculator and online resources help employees research funds.

These ease-of-use factors place ADP on par with or just above many of its competitors. We were especially impressed with the extent of automation available through the 401k Essential plan.

ADP benefits dashboard

The ADP benefits dashboard provides an overview of employee benefits and allows team members to manage their retirement benefits directly. Source: ADP

Customer Service

Beyond setup and implementation, automation tools make it easy to administer an ADP retirement plan by integrating the platform with a business’s existing ADP payroll and HR services. There is also a client administrator support page that answers common questions.

Likewise, employees can access several popular customer support topics to get quick answers and the most relevant contact information. There are also a number of educational resources and tools, including the ADP mobile app and the MyADP Retirement Snapshot calculator.

ADP lists several numbers on its website at which it can be reached. We like that the company keeps itself so available to both prospective and current customers.

While ADP is a very strong company, its retirement benefit services do have some drawbacks. For one, ADP does not disclose online the fees for some of its retirement solutions. This could inflate the overall cost a small business expects to pay once it signs up for ADP’s employee retirement plans.

Additionally, smaller businesses with the capacity for in-house administration may struggle to justify paying for the 401k Essential plan. Keeping employee retirement plan administration in-house may be the better option for these businesses.

Methodology

To choose our top employee retirement vendor pick for small businesses, we compared several retirement plan providers known for their breadth of services. Many small business owners are so pressed for time that they need to streamline their operations as much as possible, ideally through relatively few vendors. In other words, the best employee retirement vendor for small businesses should be able to cover retirement alongside all related business needs.

In particular, the best small business employee retirement plan provider should also offer HR, payroll and employee benefits services. It should be a household name in all these spaces so that the quality of its work speaks for itself. Its website should also be clear, upfront and easily navigable. ADP met all these criteria better than any other provider.

Read our review of Paychex employee retirement benefits to learn about another well-established company that provides comprehensive service.

Is ADP better than Gusto?

ADP is a much larger, more established company than Gusto. That said, Gusto is among our picks for the best HR services and best payroll services . Given ADP’s size and legacy, the brand has considerably more robust offerings. However, ADP is also less transparent about its pricing and likely to be more expensive in many cases.

How do I contact ADP?

You can call 877-537-1196 or 877-749-1852 to start the process of registering for ADP’s employee retirement services. Current customers can call 800-929-2170 or 844-227-5237.

Overall Value

We recommend ADP for …

  • Small businesses of all stripes, especially those that use ADP to manage their payroll and other HR needs.
  • Large businesses that need help with IRS compliance and other recordkeeping requirements.

We don’t recommend ADP for …

  • Small businesses that can administer plans in-house.
  • Businesses that require fully transparent pricing to make informed employee retirement vendor decisions.

Dock Treece also contributed to this article.

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6 retirement plan options for small businesses.

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The right retirement benefit can help employers attract and retain talented employees and demonstrate their commitment to employees' long-term financial goals. While small employers may have concerns about the cost and complexity of administering a retirement plan, there are a number of options that are easy to establish and may be more affordable than you think.

#1: SIMPLE IRA

The Savings Incentive Match Plan for Employees (SIMPLE) is a tax-favored retirement plan that allows both employees and employers to contribute to traditional IRAs. Key elements include:

  • Eligibility: In general, employers must have 100 or fewer employees and no other retirement plan to establish a SIMPLE IRA . Employers with such a plan must generally offer it to any employee earning $5,000 or more in compensation during any preceding two years. In addition, employees are fully vested in all contributions from day one of participation.
  • Tax credits: Tax credits of $500 for the first three years of the SIMPLE IRA plan may be available to employers to offset the costs of establishing and administering the plan.
  • Filing and testing: There is no tax or other government filing required for the Plan and non-discrimination testing is not required.
  • Contributions:  Employers must make a matching contribution to participating employees (between one and three percent depending on the circumstances) or contribute two percent of each employee's compensation.
  • Tax deductions: Employer contributions are generally tax deductible to the employer.

#2: 401(k) Plan

A 401(k) plan allows both employers and employees to make contributions toward retirement savings. Key elements include:

  • Contributions: Unlike a SIMPLE IRA, there is no employer contribution requirement. In a traditional 401(k), an employee's contributions are generally made on a pre-tax basis, and taxes on contributions and earnings are deferred until they are distributed, usually at retirement. Compared with IRA-based plans, the 401(k) plan is attractive to employees because the maximum contributions are generally higher than the SIMPLE IRA.
  • Roth option: There is also a Roth 401(k) option in which an employee contributes on a post-tax basis, and distributions (including earnings) may be made tax-free after meeting certain conditions.
  • Administrative costs:  401(k) plans may have higher administrative costs than IRA-based plans because 401(k) plans are more complicated than SIMPLE IRAs to maintain.
  • Non-discrimination testing:  401(k) plans require non-discrimination testing (which is intended to ensure the contributions or benefits provided under the plan do not discriminate in favor of highly compensated employees/owners). Highly compensated employees/owners seeking to maximize their personal contributions without nondiscrimination testing can establish a Safe Harbor 401(k).

#3: Profit Sharing

A profit-sharing plan can be an attractive retirement savings plan option for employers that have concerns about cash flow. With this type of plan, the employer can decide from year to year whether (and how much) to contribute to the plan based on what they can afford in that particular year. However, these plans tend to have higher administrative costs and more requirements than SIMPLE IRA plans or SEP Plans (see below). For example, employers with profit-sharing plans must file Form 5500 annually with the federal government and provide a summary to participants of their account activity each year.

#4: SEP Plan

A Simplified Employee Pension (SEP) plan is a retirement plan where an IRA is established for each employee, which is funded solely through company contributions. Key elements include:

  • Eligibility: An employer of any size may establish a SEP Plan, although these plans are more common when there are few or no employees other than owners.
  • Contributions: A business establishing a SEP Plan may decide whether, and how much, to contribute each calendar year up to a certain amount set by the IRS.
  • Tax credits: Qualified employers may also be eligible for a tax credit ($500 per year for the first three years of the plan) for establishing a SEP Plan and employer contributions are tax deductible on the employer's tax return.

#5: Payroll Deduction IRA

A payroll deduction IRA (Individual Retirement Account) allows employees to save for retirement without an employer-sponsored retirement plan. The employee establishes the IRA with a financial institution and then authorizes the employer to make payroll deductions from the employee's salary and contribute them to the IRA. This may not be as beneficial to employees as the employer cannot negotiate with the financial institution to obtain cost effective, or other special terms, for employees or help select investments for the IRA.

This type of plan was started by the federal government in 2014 and is a Roth IRA that invests in a U.S. Treasury retirement savings bond. Key elements include:

  • Contributions: With a Roth IRA, an employee contributes on a post-tax basis, but earnings and distributions are generally tax-free. Employees may contribute to their my RA account through payroll deductions, a checking or savings account, or income tax refunds.
  • Cost: As with payroll deduction IRAs, employers don't administer employee my RA accounts or make contributions. Therefore, there is no cost to the employer other than the time it takes to share information about my RA with employees and set up payroll deductions (if applicable).

Conclusion:

Providing retirement benefits can help improve recruitment, retention, and employee morale. Carefully evaluate the options that are available to your business and consider those that work best for your company and your employees' needs.

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How to Pick the Best Small Business 401(k) Plan Provider

Look at the options available and research thoroughly before choosing a retirement plan for employees.

The Best Small Business 401(k) Plan Providers

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Some 401(k) plan providers cater to smaller companies, such as a startup or those with fewer than 50 employees, while others are set up for medium-sized or large businesses.

To attract and keep talented employees, it can be a smart move to add a 401(k) plan to your small business. As a result of the SECURE Act , which was passed in 2019, there are now more opportunities for small employers to offer retirement plans. The law allows small businesses to participate in pooled employer plans, making it easier and less costly for small employers to provide workers with a retirement plan. Here's how to select the right 401(k) plan provider for your small business.

Find the Best 401(k) Providers for Small Business

Since there are many providers to choose from, keep in mind that not all will offer the same services or prices. Some 401(k) plan providers cater to smaller companies, such as a startup or those with fewer than 50 employees, while others are set up for medium-sized or large businesses.

These providers specialize in 401(k) plans for small businesses:

  • American Funds. Small businesses of any size, from startups to those that have recently merged, can find traditional and Roth options through this provider.
  • Betterment. Through its online cost calculator, small business owners can enter their number of employees and plan preferences to gain a personalized estimate of 401(k) costs.
  • Charles Schwab. Charles Schwab provides 401(k) plans for companies of any size and creates customized plans to fit a business’ specific needs.
  • Employee Fiduciary. With 401(k) plan establishment fees that start at $500, Employee Fiduciary provides personalized service from setup through plan administration.
  • Fidelity Investments. Fidelity has small business 401(k) plans available for businesses with more than 20 employees and an app that employees can use to monitor their accounts.

How to Set Up a 401(k) for a Small Business

To offer a 401(k) plan for employees, the IRS lays out four steps to get started. These include:

  • Adopt a written plan. If you have assistance from a professional or a financial institution, this step will usually be provided for you.
  • Arrange a trust for the assets. A plan’s assets need to be in a trust to make sure they are used only for the participants and their beneficiaries.
  • Develop a recordkeeping system. If you work with a financial institution, you can generally expect to have help with keeping the necessary records.
  • Communicate information to employees. This includes sharing details about the plan with workers who are eligible to participate.

You will also have to decide on the type of 401(k) plan to offer employees. This could be a traditional 401(k) plan, a safe harbor 401(k) plan or an automatic enrollment plan. With a traditional 401(k) plan, the employer can elect to make contributions for all plan participants or offer a 401(k) match , but is not required to contribute. A safe harbor 401(k) plan requires the employer to make annual contributions on behalf of employees. An automatic enrollment 401(k) plan permits the company to automatically sign employees up for the plan and place salary deductions in certain investments.

Consider Whether to Match Employee 401(k) Contributions

Many employees rely on a 401(k) plan to help fund their retirement. “In our experience, a company’s contribution to the plan has become a key recruitment and retention tool of high-performing leaders,” says Eric Shisler, vice president and director of research and retirement plan services at Budros, Ruhlin & Roe in Columbus, Ohio. You might offer a match which consists of a percentage of an employee’s contribution, up to a specified percentage of the employee’s salary. Or you could provide a match up to a certain dollar amount.

Another type of employer contribution is 401(k) profit sharing, which allows a business to set aside a portion of its pre-tax profits in employee retirement accounts. You may choose to contribute a certain dollar amount, or a percentage of each employee’s salary. Before committing to contributions, you’ll want to think about short- and long-term profit projections. “Another key consideration for business owners when setting up a plan is if the company can sustain their contribution if cash flow fluctuates,” Shisler says.

Look at Small Business 401(k) Costs

Providing 401(k) accounts to employees will come with fees , and you should carefully sort through the fine print before selecting a 401(k) plan. A small business 401(k) plan might charge recordkeeping fees, investment fees and transaction fees.

Keep in mind that fees might change if the company hires more workers. “Look to understand how the fees quoted may change as the plan grows,” Shisler says. “Plans with the cheapest pricing upfront are not always the cheapest plans over time, especially with well-funded plans.”

Consider the Small Business 401(k) Investment Options

Look for a 401(k) plan that provides an assortment of investment options , rather than just a few ways to invest. “One of the major things that you want to look for in a plan for small companies is what kind of lineup of investment options will be available to the employees,” says Mike Scarborough, president and CEO of Oak Wealth Partners in Lexington Park, Maryland. “It should be broad-based in the sense that it should have large and small stocks, various types of bonds, some international exposure that is very broad-based, as well as emerging markets."

Carefully Select a Small Business 401(k) Provider

You’ll typically want to involve experts in the financial industry to help oversee the 401(k) plan. "Many individuals in the financial services industry can sell you a plan, but usually there are certain advisors who specialize in working with 401(k)s," says Art Haws, CEO and managing partner and HawsGoodwin Wealth in Franklin, Tennessee. "They can help you navigate the many issues and decisions made when starting and maintaining a plan."

A trustee will manage the 401(k) plan assets, and carries the responsibility of making decisions according to the plan's terms. A 401(k) custodian does not make management decisions, but holds plan assets.

When researching options, ask about the third party administration setup. "Some plans bundle the TPA services like plan design and documents, testing and tax preparation, while others require you to work with an outside TPA," Haws says. "An experienced financial advisor can help explain the benefits of either, and recommend the best solution for your specific situation." Some financial professionals will help you communicate about the retirement plan to employees. Also ask about payroll integration, as a 401(k) provider with payroll-related services might make your 401(k) plan easier to manage.

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ADP, Morningstar Launch Managed Accounts for Small Business 401(k)s

Payroll provider and investment manager cite goal of providing personalized retirement portfolio guidance to underserved small-employer market.

adp 401k plan for small business

ADP Retirement Services and Morningstar Retirement Group announced the offering as a way of providing “personalized retirement investment and savings advice” to employees of all size companies.

ADP is offering its more than 100,000 plan sponsor clients Morningstar’s proprietary managed account service as well as adviser managed accounts that can be managed by third-party advisers; both use Morningstar methodologies to build investment portfolios and suggest savings rates and goals. The service then takes “discretionary authority” to manage the participant’s retirement account going forward. Fees will vary based on whether the plan sponsor elects to use the service as an opt-in or a default/hybrid-default option in their plan, a Morningstar spokesperson wrote via email. 

“Continued inflation and market volatility have made the need to help employees figure out how to maximize and invest their retirement savings greater than ever,” Brock Johnson, president of global retirement and workplace services at Morningstar Investment Management, said in a statement. “This is especially true in the small end of the market, where access to personalized advice within retirement plans is often limited.”

Consultancy Cerulli Associates’ forecasts that the managed account market will grow more than 13% over the next four years to reach $15.6 trillion. Despite growth, the higher-cost of providing managed account services continues to turn off some retirement plan advisers and plan sponsors. In its second quarter earnings report, Morningstar reported its first jump in uptake of workplace solutions managed accounts of 3.8% after showing declines in the prior three quarters.

Morningstar’s adviser managed accounts service allows for third-party registered investment advisers to offer co-branded managed account services to retirement plan clients. The data and investment firm’s flagship managed account services uses its proprietary portfolios and methodologies. In addition, ADP will make the adviser managed accounts service available to two retirement-focused RIA firms, with plans to add more.

“We think every retirement plan, no matter the size, should have access to personalized advice at scale,” Chris Magno, SVP and general manager of ADP Retirement Services, said in a statement.

ADP and Morningstar join other small plan providers that have partnered on managed account offerings. Plan provider Ascensus partnered with Franklin Templeton on an offering in 2022 , and Vestwell partnered with Franklin Templeton on an adviser managed account offering in 2021 .

ADP is the second largest 401(k) recordkeeper for plans of under $10 million as of the end of 2022, second to Paychex Inc., according to the latest data from PLANSPONSOR, which is a sister publication of PLANADVISER.

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Small Business Owners: Getting the Biggest Bang for Your Retirement Plan Buck

Amber Harms

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A financial advisor discusses Safe Harbor 401ks with two small business owners

Now's the time to set up a new retirement plan or make changes to your existing plan. Here's how to make sure everyone gets the most value from your choice of retirement plan options.

For small business owners, making the decision to offer your employees a retirement savings plan can be intimidating. Which type of plan is best for my company? How much will it cost? How much time will it take to set up?

Including a retirement plan in your benefits package is quickly becoming a must-have if you want to stay competitive. The latest research from the Society for Human Resource Management (SHRM) found that 82 percent of employees say retirement savings is an important benefit — that's up 27 percent from 2021.

The Safe Harbor 401(k) plan checks a lot of boxes

There's no lack of choices when it comes to retirement plans — from IRAs and Roth 401(k)s to SIMPLE and SEP plans. But not all are inexpensive to establish and easy to maintain.

That's where a Safe Harbor 401(k) can be ideal for small business owners looking for maximum benefits. This type of plan is simply a 401(k) with a mandatory employer contribution and vesting requirement. In exchange for required contributions, you can forgo annual nondiscrimination testing, which helps reduce your duties as a plan administrator.

But Safe Harbor plans offer more benefits than just reduced paperwork. Did you know that more than a third of small business owners have no retirement savings? A Safe Harbor plan makes it easy to save for your own retirement while you're helping your employees become retirement ready.

As the business owner, you can contribute up to $20,500 tax deferred, which lowers your personal tax liability. In addition, the employer matching contribution you provide for employees is a tax deduction.

Understanding Safe Harbor plan deadlines

Though businesses have until October 1 to implement a Safe Harbor plan, you must begin the process no later than September 16. Missing that deadline means you'll have to wait a full year to start reaping the benefits of sponsoring a Safe Harbor 401(k) retirement plan.

If you currently offer a retirement plan, depending on the type of plan, you may be able to convert it to a Safe Harbor 401(k) to take advantage of the full benefits it offers employers.

The ADP Retirement Services team has educated thousands of small business owners to make more informed decisions when choosing the best retirement plan for their needs. We've also helped them start building their own retirement readiness. Let us know if we can do the same for you.

Download our free guide on Safe Harbor to learn more or visit ADP Retirement Services .

Did you find this article helpful? Email it to a colleague or share on your social media platform using the buttons under the article's title at the top of this page.

BLOG DISCLOSURE – ADP Provided : Registered representative of ADP Broker Dealer, Inc. (ADP BD), Member FINRA, an affiliate of ADP, Inc., One ADP Blvd, Roseland, NJ 07068 and Associated person of ADP Strategic Plan Services, LLC (SPS) an SEC Registered Investment Adviser. Registration does not imply a certain level of skill or services.

ADP, Inc., and its affiliates do not offer investment, tax, or legal advice to individuals. Nothing contained in this article is intended to be, nor should be construed as, particularized advice or a recommendation or suggestion that you take or not take a particular action. Questions about how laws, regulations, guidance, your plan's provisions, or services available to participants may apply to you should be directed to your plan administrator or legal, tax or financial advisor. ADPRS-20220816-3528

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December 28, 2022

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If you have questions about ADP 401(k) fees – how they work, how much they cost on average, or how you can find & calculate them for your plan – you’ve come to the right place. In this guide, we’ll show you how to calculate the full cost of an ADP 401(k) plan using their DOL-mandated fee disclosure.

By the end of this guide, our aim is for you to have a complete understanding of how ADP’s pricing works, how much you’re paying, and how your fees stack up.

Let's dive in.

What are Average ADP 401(k) Fees?

In our most recent Small Business 401(k) Fee Study , we found that ADP plans cost small businesses an average of 1.47% of plan assets each year, with their admin fees totaling about $314.08 per participant.

While their per-capita admin fee is below the study average of $422.30, that number can easily grow much higher due to the way these fees are charged.

In our experience , about 60% of admin fees charged by ADP are paid by revenue sharing – “hidden” 401(k) fees that lower the investment returns of plan participants. Not only are plan sponsors or participants often unaware that they’re paying them, but they’re always charged as a percentage of plan assets. That means plan participants will automatically pay ADP higher and higher administration fees for the same level of service as their account grows. That’s not fair!

When you factor in compound interest , these growing fees can make a huge dent in your retirement savings. As such, you want to do everything in your power to avoid paying them.

If you’re currently using ADP for your 401(k), your first step to avoiding these fees is to find out whether or not you’re paying them. We’ll show you how to do that later.

High 401(k) Fees

How to Find & Calculate ADP 401(k) Fees

To understand how much you’re paying for your ADP plan, I recommend you sum their administration and investment expenses into a single “all-in” fee . Expressing this as both a percentage of plan assets, as well as hard dollars per-participant, will ultimately make it easier for you to compare the cost of your ADP plan to competing 401(k) providers and/or industry averages.

To make this easy on you, we’ve created a spreadsheet you can use with all the columns and formulas you’ll need. All you need to do is find the information for your plan, then copy it into the spreadsheet.

ADP 401k Fees_Template Spreadsheet

Doing this for ADP can be a bit of a pain, but not to worry – we’ll show you everything you need to do in 4 simple steps.

Step 1 – Gather All the Necessary Documents

To calculate your ADP 401(k) fees, you’ll need their 408(b)(2) fee disclosure - a document that ADP has named the  “ADP Compensation and Fee Disclosure Statement.” ADP is obligated by Department of Labor regulations to provide a 408(b)(2) disclosure to employers. It contains plan-level information about the administration fees charged by ADP and is intended to help employers evaluate the “reasonableness” of these fees. This document can be found on the ADP employer website.

  If you hired an outside financial advisor for your plan, you’ll need to factor their pricing into your ADP fee calculation. This information can usually be found in a services agreement or invoice.

Once you’ve gathered the necessary documents, you’re ready to move on to step 2.

Step 2 – Locate ADP’s Direct 401(k) Fees

401(k) administration fees can be “direct” or “indirect” in nature. Direct fees can be deducted from participant accounts or paid from a corporate bank account , while indirect fees are paid from investment fund expenses - reducing their annual returns. Direct fees are the most transparent and are probably the ones you’re most familiar with.

ADP’s direct fees can be found in the “Direct Compensation Schedule” section of their 408(b)(2) fee disclosure:

ADP 401k Fees_Direct Fees

In step 4, you’ll add the total to a spreadsheet to calculate the direct fees charged by ADP.

Next, we’ll see if ADP charges your plan any hidden administration fees.

Step 3 – Uncover ADP Hidden 401(k) Fees

In our experience , roughly 60% of the administration fees charged by ADP are paid by revenue sharing – a form of “indirect” fee paid from the operating expenses of some mutual funds . Revenue sharing increases the cost of a mutual fund, thereby lowering its annual returns. There are two basic forms:

  • 12b-1 fees – these payments usually compensate a financial advisor.
  • Sub-Transfer Agency (sub-TA) fees – these payments usually compensate a recordkeeper.

Revenue sharing is not disclosed as a hard dollar amount on the ADP fee disclosure. Instead, its buried in the expense ratio of plan funds, making them really easy to overlook. You can find these “hidden” administration fees disclosed as a percentage of assets in the “ADP Investment Fund Expense and Compensation Disclosure” section of their 408(b)(2) fee disclosure document:

ADP 401k Fees_Revenue Sharing

In step 4, you’ll multiply the revenue sharing percentages by the applicable fund balance to calculate the indirect fees charged by ADP.

Step 4 – Calculate Your All-In 401(k) Fee

In this step, we’ll enter the information we found into our spreadsheet to calculate your plan’s total cost – or “all-in” fee (administration fees + investment expenses).

First, enter the fund information from your ADP 408(b)(2) document into the spreadsheet. The formulas will automatically calculate your indirect fees.

ADP 401k Fees_Indirect Fees

Next, we need to calculate your direct fees.

Enter ADP’s monthly fee into the appropriate line item towards the bottom of your spreadsheet. The formula will automatically calculate your annual ADP fee.

ADP 401k Fees_Complete Spreadsheet

At this point, all of your administration fees and investment expenses (net of indirect fees) should be broken out and totaled, giving you the all-in fee of your ADP plan. $6,618.68 for our example .

To make it easier for you to benchmark your fees against other plans, we recommend expressing this number as a % of plan assets. In our example, this number is 1.06% ($6,618.68/ $329,199.49).

Evaluate Your Admin Fees on a Per-Capita Basis

After you have calculated your all-in fee, we recommend you take a quick look at your ADP administration fees on a per-capita (i.e., headcount) basis.

The reason?

Excess administration fees – basically, fees that outstretch your 401(k) provider’s level of service – might not be readily apparent if they’re solely evaluated on an all-in basis with investment expenses. This is especially true if your plan has lots of assets.

To demonstrate the value of this evaluation, consider a $1,625,825.48 401(k) plan with only 7 participants from our 2018 small business 401(k) fee study . While its $25,611.64 all-in fee (1.58% of plan assets) was only a bit above the study’s 1.40% average, its $2,521.81 per capita administration fee ($17,652.64/7 participants) was about six times average!

To calculate your per-capita administration fees, simply divide the administration fee total from your spreadsheet by the number of participants in your plan. For our 23-participant example, this number is $267.56 – which is quite a bit higher than participants could be paying with a low-cost 401(k) provider .

Don’t Let Your ADP 401(k) Fees Get Out of Hand

By now, you should have a complete breakdown of your ADP 401(k) fees and how they’re being charged.

Even if yours are below average now, ADP’s revenue sharing can cause them to very quickly become excessive as assets grow. For this reason, it’s crucial that you compare your plan’s fees on a regular basis.

Too much trouble? We’ve got a solution.

Simply switch to a 401(k) provider that charges fees based on headcount – not assets - to the extent possible. Such a fee structure will make it easier for you to keep your 401(k) fees in check as your plan grows. You just might save some money while you’re at it.

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Operator: Greetings and welcome to the IRS Program on Retirement Plans for Small Employers and Self-Employed. We're just now to begin, we'll begin with Don. Please go ahead. Donald: Thanks for attending this webinar on Retirement Plans for Small Employers and Self-Employed. I'm Don.

Martin: And I'm Martin. Donald: The information in today's webinar is not official guidance.

Let's get started. Saving for retirement is a lifelong commitment for most people. A retirement plan can help small employers and their employees, and self-employed taxpayers can save for their retirement as well. If you find the plan that's the best fit for your business or other entity, you'll keep it longer, have fewer problems and be more satisfied with your commitment. As we go through today's presentation, we're using plan contribution amounts for 2021 to give you a way to compare the different plans. If you're viewing this as a recording after 2021, please go to irs.gov/retirement for the latest plan and contribution limits. Martin: Slide 2. This presentation takes a quick look at the types of retirement plans available for small businesses and the key features, pros and cons of these plans and the final requirement, if any, to each plan.

The more you know about the types of plans available, the more likely you can pick the best plan for your business. Donald: As we move to Slide 3, many small employers have thought about saving for retirement, but we're too busy running their business or organization to find and adopt a plan. An employer that offers a retirement plan can help employees and the owner save for a more secure future. A retirement plan can also help you attract and keep quality employees. Martin: And there are tax benefits for both the employer and the employee. Donald: Yes, there are Marty. Not only are contributions made to the plan deductible, but the earnings on those contributions grow tax free. Employees are only taxed on benefits when they're distributed from the plan. Also, small employers can claim tax credits for the cost of setting up certain plans.

See irs.gov/new plan credit. Also, low-income and moderate-income employees can take a credit of up to 50% of amounts they contribute to certain plans. See irs.gov/saverscredit for more information. Martin: On to Slide 4. A retirement plan can be adapted by many types of employees from self-employed and sole proprietors to partnerships, corporations and charities. Of course, some will be a better fit than others. No matter how large or small financially successful an employer may be - there is a retirement plan that fit its needs. We view these options on the next slide. Donald: On Slide 5, we talk about the two basic groups of retirement plans we'll discuss. They are IRA-based Plans and Qualified Plans. IRA-based Plans are the least complicated plans to run and include payroll deduction IRAs, simplified employee pension plans known as SEP IRAs and SIMPLE Plans. We'll talk about these momentarily. When you hear Qualified Plans, think of Defined Contribution Plans, which include profit-sharing and 401(k) Plans that we'll cover today and Defined Benefit Plans. Martin: And on to Slide 6, IRA-based Plans are the least complicated plans to administer. Payroll deduction IRAs, SEP IRAs and SIMPLE IRA Plans all use an IRA to hold the contributions. An IRA is set up for each eligible employee and contributions are made to that employee's IRA. Donald: Turning to the next slide, Slide 7, a payroll deduction IRA arrangement can be offered by any employer. It has the fewest legal requirements and is the easiest to administer. An employer doesn't formally adopt a plan or make any contributions. The employer just offers employees the opportunity to have after tax amounts deducted from their pay and then contributed into an IRA. The employer can help set up the IRA or not, employees decide whether and how much to contribute. For 2021 and employee can contribute up to the IRA contribution limit of $6,000 plus an additional $1,000 catch-up contribution if they're age 50 or over. Employees may deduct the contribution under the general rules for IRA deductions, and the employer treats the contributions as ordinary salary or wages. Martin: And on to Slide 8. Next up is a Simplified Employee Pension or SEP IRA. A SEP can be adopted by any employer. A SEP must be established by signing an Official Plan document a form that satisfies certain legal requirements. The document can be an IRS model Form 5305-SEP or an IRS preapproved SEP offered by a financial institution. An eligible employee is at least 21 years of age, worked for the employer three of the last five years and earn $650 or more in compensation during the year. An employer can choose less restrictive eligibility requirements on the adoption agreement for their plan. The employer sets up an IRA for each employee who will meet the plan's eligibility requirements. If the employer decides to contribute to the SEP, contributions must go to all eligible employees and be based on the same percentage of their compensation. There are no employee contributions or deferrals, contributions and deductions are limited to the lesser of $58,000 or 25% of compensation for 2021. Donald: And now on Slide 9, let's talk about the next IRA-based retirement option which is a - a Savings Incentive Match Plan for Employees, also known as a SIMPLE IRA. An employer must have 100 or fewer employees and can't maintain another retirement plan at any time during the year if they're going to sponsor a SIMPLE IRA. It can be easily established by signing IRS Form 5304-SIMPLE or 5305-SIMPLE or an IRS approved document from a financial institution. One IRS model form allows the employer to pick one financial institution to hold the IRAs. The other allows each employee to pick their own financial institution to hold their specific IRA account. A SIMPLE IRA Plan must be offered to all employees with compensation of at least $5,000 in any prior two years, and who are reasonably expected to earn at least $5,000 in the current year. There is no age or hours of service requirement in a SIMPLE IRA. An employer can choose less restrictive eligibility requirements in the adoption agreement. A SIMPLE IRA accepts salary deferrals from employees like a 401(k) Plan does and requires contributions from the employer. Eligible employees can contribute a percentage of their pay through payroll deduction to the plan up to $13,500 in 2021, plus an additional $3,000 if age 50 or over. An employee's salary deferrals are subject to FICA payroll taxes, but they're exempt from federal income tax. Employers are required to contribute to their SIMPLE every year using one or two formulas. They generally can either match employee contributions, dollar for dollar up to 3% of compensation or make a fixed contribution of 2% of compensation for all eligible employees, even for those who do not elect to defer. Whichever formula you choose, must be shared with employees before they make their salary reduction decisions, meaning, before the start of the year. Martin: We're on to Slide 10 With all IR - IRA-based Plans, there is very little administrative paperwork. Administrative expenses are low, and no Form 5500 Series returns are required. While easier to administer, they're less flexible than Qualified Plans. Participants can withdraw money at any time under the usual IRA distribution rules, which may include a 10% additional tax on early distributions if the participant is under the age of 59 1/2. No loans are allowed in an IRA-based Plan. Contributions are limited in a payroll deduction IRA, but it could help jumpstart saving for retirement from employees working for smaller employers. A SIMPLE IRA Plan allows a smaller business to have a plan that allows the salary deferrals without the testing requirements of a 401(k) Plan. A SEP Plan does allow larger employer contributions up to 25% of compensation or $58,000 for 2021. One disadvantage of SEP's and SIMPLE IRA Plans is the eligibility requirements are easy to satisfy.

Employees can work a very limited schedule and be eligible for the plan. Also, as an owner, if you have ownership interest in other businesses, you may be part of a controlled group. So, all employees that work for those related employers that satisfy the eligibility requirements must participate in the IRA-based Plan, no matter which related employer employs them. Donald: Okay, so that's an overview of IRA-based Plans. And now on Slide 11, let's talk about our other major plan category, which are Qualified Plans. Assets in these plans are generally held in a single qualified trust, as opposed to IRA-based Plans, where assets are held in individual IRAs established for each participant. We're covering Profit-Sharing Plans, 401(k) Plans and Defined Benefit Plans here today. These plans are a jump in the administrative burden compared to that associated with IRA-based Plans. Martin: On to Slide 12, We talk about Qualified Plans.

Employees in Qualified Plans enter the plan as participants on the next plan entry date after they reach age 21 and work 1,000 hours over the 12-month period after they are hired. In a Qualified Plan, plan sponsors are required to operate the plan for the benefit of all participants.

Distributions from the plan that generally allowed only after an event specified in the plan, such as retirement, no longer employed, termination of the plan. These plans can allow participants to take loans against their account balances. In a 401(k) Plan, participants that suffer a hardship that meets rules outlined in the plan document can take the hardship distributions from their account. Vesting rules can limit a participant's ownership interest in the employer contributions, like a 401(k) match, requiring up to six years of service to get a 100% ownership of employer contributions. These Qualified Plans generally must file an Annual Form 5500 Series return. And finally, the employer must make sure the plan documents are timely amended for changes in the law. Even an IRS preapproved plan documents must be amended from time to time. A plan document that is not kept up-to-date can jeopardize the plans' tax advantage status.

Donald: Turning to the next slide, Slide 13, let's look at these specific types of Qualified Plans to see what a fit for your small business might be. The first type of Qualified Plan is a Profit-Sharing Plan. And like all Qualified Plans, an employer generally requires all employees who have reached age 21 and worked at least 1,000 hours to participate in the plan. You don't need to have a profit to contribute to a Profit-Sharing Plan. Employer contributions are discretionary.

That means, the employer can decide how much to contribute, and a contribution is not required each year. The contributions you make to a Profit-Sharing Plan must be allocated among the participants by a formula outlined in the plan document. Most plans use a compensation to total compensation and allocation formula. For example, a plan participant who received 5% of the compensation paid to participants during the plan year will receive an allocation equal to 5% of the amount the employer contributes to the plan. Allocations of employer contributions are limited to $58,000 for 2021 or 100% of the participants' compensation. The employers' deduction for contributions made to a Profit-Sharing Plan cannot exceed 25% of the aggregate compensation for all participants. Martin: On to Slide 14, Profit-Sharing Plans generally must file an Annual 5500 Series return. Again, you must make sure your Profit-Sharing Plan is kept up-to-date for any changes in the law or regulations. Employees can make that process easier by adopting a document that's been preapproved by the IRS. It will still need to be amended. It may be easy to keep up with the needed law changes. Profit-Sharing Plans are operated by every type and size of employer. What does the Profit-Sharing Plan offer over the SEP? Donald: I can answer that, Marty. They have the same contribution limits, but a Profit-Sharing Plan offers more flexibility to an employer. Martin: That's right. As a matter of fact, the Profit-Sharing Plan can exclude employees that work less than 1,000 hours during the year, for a SEP, $650 per year and three years gets you into a SEP. At a $15 an hour wage, that's about - as little as about 44 hours a year. A Profit-Sharing Plan can be designed so the contribution and allocations are not the same for all employees, it can allow for loans to participants. A Profit-Sharing Plan that doesn't try to exclude classes of employees or provides different allocation formulas for different groups of employees can be easy to administer. If you design the plan to try to maximize benefits for the owner and minimize benefits to the rank-and-file employees, plan administration becomes much more complex and expensive. If you have ownership interest in other businesses, you may be part of a controlled group. In a Profit-Sharing Plan, you may be able to exclude some of these employees or related employers and still meet coverage requirements. While the SEP will have to include all those who meet the $650 per year requirements. If you're looking for a plan that would allow you and your employees to make your own contributions, that would be a 401(k) Plan. Donald: So on Slide 15, let's start talking about a 401(k) Plan, which is a Profit-Sharing Plan that also allows employees to choose to have a portion of their salary deferred into the plan. It will have the same age 21 and one year of service eligibility requirements as a Profit-Sharing Plan. The plan can leave the decision to defer salary entirely to the employees or the plan can provide that a certain percentage of each employee's compensation will automatically be deferred into the plan until the employee elects, otherwise. Research has shown that if an employee's original decision to defer into the plan is made for them by the plan administrator, employees are more likely to save for retirement. Pre-tax salary deferrals are not subject to federal income taxes but are subject to FICA withholding. Each employee's salary deferrals are limited to no more than $19,500 in 2021, plus an additional $6,500 if age 50 or over by the end of the calendar year. An employer can choose to allow for Roth style after tax deferrals. Roth deferrals are subject to full income tax and FICA withholding. An employer may also choose to offer matching or other employer contributions. The total annual additions to the plan for each employee that's the total of all employee and employer contributions in forfeitures cannot exceed $58,000 or 100% of compensation for 2021 or $64,500, including the $6,500 age 50 catch-up contribution. Martin: Now on to Slide 16, 401(k) Plans require an annual non-discrimination tests. Salary deferrals are tested each year using the Actual Deferral Percentage test or ADP test. This ADP test compares the average percentage of compensation deferred by non-highly compensated employees with the average percentage of compensation deferred by highly compensated employees. If the ADP of the highly compensated employees exceeds the ADP, the non-highly compensated employees by too much, the highly compensated employees will have the deferrals limited or reduced. A plan - must also test matching and other contributions using a similar Actual Contribution Percentage or the ACP test.

You must perform the ADP and ACP tests each year. However, certain 401(k) Plan designs may avoid the testing altogether. These are Safe Harbor Plans In the Safe Harbor 401(k) Plan you can avoid the ADP and ACP testing by making either a minimum matching contribution or fixed contribution for all participants. With the matching contribution option, the employer matches 100% of the first 3% of salary deferred by the non-highly compensated employees, plus 50% for the next 2% of elective deferrals for a total match of 4% of compensation. With the fixed contribution option, the employer makes a non-elective contribution of 3% of compensation for all eligible non-highly compensated participants, including those who don't make any elective deferrals for the year.

Meet the Safe Harbor and there's no ADP testing required. If the match is limited to no more than 6% of compensation, the ACP test has also been satisfied. In exchange for providing this minimum level of contribution for all plan participants, highly compensated employees don't have their deferral limited by the deferral of non-highly compensated employees. Don will explain the Auto Enrollment 401(k) Plans. Donald: Thanks Marty. In an Automatic contribution arrangement, employers automatically enroll new employees in the plan to make salary deferrals unless or until the employee opts out. You can avoid the ADP, ACP testing by adopting a Qualified Automatic Contribution Arrangement or QACA. A QACA will allow the sponsor to skip the ATP test if, first, the Automatic Deferral Percentage or ADP is at least 3% for the first year, but less than 10% for the first year and 15% thereafter. Second, the employer contributes either a matching contribution of 100% of the first 1% of salary deferrals, plus 50% of the next 5% of deferrals or contributes a non-elective contribution of 3% of compensation for all participants, including those who choose not to make any elective deferral. And third, the employer must also provide a notice to the employees of their rights under the plan every year before deferral elections have to be made. A Qualified Automatic Contribution Arrangement or a QACA helps build the largest nest egg for participants, while avoiding the need to perform ADP and ACP 401(k) testing. Martin: And now on to Slide 17, 401(k) Plans are required to file an Annual Form 5500 Series return. Go to irs.gov/Form 5500 for more information. 401(k) Plans are the most popular plans for employees right now. The Safe Harbor and Automatic Enrollment 401(k) Plans are becoming more popular each year, since they don't limit the salary deferrals of higher paid employees. These plans also may lessen the administrative burden, while increasing the savings rates for all employees. Common features you'll find in all 401(k) Plans are: High contribution limits, fully vested salary deferrals and the Annual Form 5500 filing requirement. Features that employees may choose to include in their 401(k) Plan are: Designated Roth accounts, loans to participants from their accounts, hardship distributions, automatic enrollments and in-service withdrawals. There are pros and cons. Donald: Administrative costs are higher in the 401(k) Plans than for IRA-based Plans and Profit-Sharing Plans. A traditional 401(k) Plan one that doesn't include a Safe Harbor or a QACA must satisfy the ADP and ACP test every year. So it's very easy to make a testing mistake.

Traditional 401(k) Plans allow more flexible employer contributions. However, the contributions and salary deferrals for highly compensated employees will be limited by how much the non-highly compensated employees defer. An exchange for higher required employer contributions, a Safe Harbor 401(k) Plan and a Qualified Automatic Enrollment 401(k) Plan may allow you to avoid ADP and ACP testing altogether. And both plans may increase the savings rates for all your employees and may even lessen your administrative headaches. Martin: And now on to Slide 18 which is the last category, we're discussing are Defined Benefit Plans. Just like a Profit-Sharing and a 401(k)

Plan, the plan must cover all employees age 21, who worked at least 1,000 hours during the plan yield. A Defined Benefit Plan provides for fixed, pre-established benefits for employees at retirement. The employer contributes an amount each year to fund the future benefits for participants. Required contributions are determined by the plans' actuary based on projected benefits and actuarial assumptions. There are no individual participants' accounts, just an accrued benefit. In a Profit-Sharing Plan, the amount that an employee ends up with the retirement is a combination of the contributions made and their earnings on them. So, the risk of that investing falls on the participants. In a Defined Benefit Plan, the contributions go towards funding a future benefit when that participant retires. The investment risk falls on the plan's sponsor, not the employee. Many large employers have decided they don't want to carry that risk and no longer sponsor Defined Benefit Plans. However, Defined Benefit Plans are still attractive to some employers, since they generally will have the largest contributions and deductions for the employer. These plans are the most complex and costly plans to maintain. Donald: Going on to the next slide, Slide 19, Defined Benefit Plans have an Annual Form 5500 filing requirement. They also include - that form also includes a schedule SP that's completed by and signed by the plans' actuary. Since a Defined Benefit Plan generally has a required contribution each year, it's typical to companies with high, stable earnings adopting Defined Benefit Plans. They're also attractive for small employers with highly paid employees that have long service periods. For those high earning, longer service employees, the plan may have only 10 or 15 years to build up enough assets to pay the accrued benefits. That's why a Defined Benefit Plan provides for the largest contribution, deduction and benefit of any retirement plan. A downside of these plans is a contribution is normally required each year, an excise tax applies if the employer doesn't make those required contributions. Martin: And on to Slide 20. That's a quick look at retirement plan options for small employers. A companion piece of this presentation is Publication 3998.

Choosing a retirement solution for your small business. It has a chart that compares the key features of IRA-based Plans and Qualified Plans. Donald: Also, check out the Small Business resources' section at irs.gov/smallemployerplans. This webinar will be recorded and posted on irsvideos.gov sometime next month. To check out this recorded webinar and others, select the Business tab and then Retirement Plans on the left navigation of that webpage. Martin: We also have an electronic newsletter, the employee plan news. To read old issues and subscribe, go to irs.gov/retirement news. To leave us feedback on the presentation or request a speaker for your next event, send an email to [email protected]. Donald: On behalf of Marty and myself, thank you for participating in today's webinar.

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    All-In-One Payroll Software Designed To Help Your Company Grow. Make The Switch To ADP. Let's Talk ADP® Payroll, Benefits, Insurance, Time, Talent, HR, & More.

  3. 401(k) Plans

    Offering a 401 (k) plan is more affordable for small businesses than ever, thanks to new tax credits introduced by the SECURE 2.0 Act. How many employees were paid between $5,000 - $100,000 in W-2 wages last year? How many employees will earn more than $100,000 in W-2 wages this year? Will you be offering an employer contribution (match or

  4. 401(K) for Small Business

    Offering a 401 (k) plan is more affordable for small businesses than ever, thanks to new tax credits introduced by the SECURE 2.0 Act. How many employees were paid between $5,000 - $100,000 in W-2 wages last year? How many employees will earn more than $100,000 in W-2 wages this year? Will you be offering an employer contribution (match or

  5. 401(k) for Small Business Owners

    What types of 401 (k) plans are available for small business owners? Small business owners generally have many retirement plan options to choose from, some of which may be more appropriate than others, depending on the size of their organization. Examples include: Traditional 401 (k)

  6. Setting Up A 401k

    A 401k is a retirement savings plan funded primarily by employees with pretax earned wages. Employers have the option to contribute to their employees' plans, thereby maximizing the full savings potential. How do 401k plans work? Employees who are enrolled in a 401k contribute to their retirement savings plan via pretax payroll deductions.

  7. ADP 401k Review and Pricing in 2024

    Pros ADP offers a variety of employee retirement plans to meet all small businesses' needs. The retirement plans integrate with ADP's popular payroll system, thus automating manual tasks and saving time. The company has a mobile app that makes it easy for employees to enroll in their retirement plan, make changes and track their funds' performance.

  8. Starter 401(k): Leveling the Playing Field for Small Businesses

    Among the key provisions, which if passed would be effective after 2023: Small businesses with no current plan can offer either a starter 401 (k) plan or safe harbor 403 (b) plan. Eligible employees would be automatically enrolled at the minimum default level of 3% of compensation. No employer contributions would be required, which would lower ...

  9. 7 Top 401(k) Providers for 2022

    The key is to choose a 401 (k) provider that is specially equipped to provide small businesses with quality retirement plans, investment advisory services and administrative support.

  10. Top 10 Small Business 401(k) Plan Providers

    Here we list ten of the top 401 (k) plan providers that serve small businesses. ADP ADP's 401 (k) plans offer investment options from more than 300 investment managers. Three...

  11. Login & Support

    Follow the steps to enter your registration code, verify your identity, get your User ID and password, select your security questions, enter your contact information, and enter your activation code. You will then have the ability to review your information and complete the registration process. Administrator Registration

  12. ADP 401k Essential

    ADP 401k Essential is a new retirement plan solution designed specifically for small businesses. This feature-rich retirement product is embedded with automa...

  13. PDF Frequently Asked Questions you may have about 401(k) plans

    ADP Retirement Services is also the record keeper for your company's 401(k) plan and has access to your payroll information so that the correct salary-deferred savings can be deposited to your retirement savings account each pay period. How do I access my account?

  14. ADP Employee Retirement Review

    ADP is primarily known as a large payroll company. The company offers employee retirement benefits suitable for any small business. ADP's 401k Essential plan offers transparent pricing and full ...

  15. 6 Retirement Plan Options for Small Businesses

    #1: SIMPLE IRA The Savings Incentive Match Plan for Employees (SIMPLE) is a tax-favored retirement plan that allows both employees and employers to contribute to traditional IRAs. Key elements include: Eligibility: In general, employers must have 100 or fewer employees and no other retirement plan to establish a SIMPLE IRA.

  16. How to Pick the Best Small Business 401(k) Plan Provider

    Aug. 4, 2021, at 9:34 a.m. Getty Images Some 401 (k) plan providers cater to smaller companies, such as a startup or those with fewer than 50 employees, while others are set up for medium-sized...

  17. Retirement Planning Services

    Offering a 401 (k) plan is more affordable for small businesses than ever, thanks to new tax credits introduced by the SECURE 2.0 Act. How many employees were paid between $5,000 - $100,000 in W-2 wages last year? How many employees will earn more than $100,000 in W-2 wages this year? Will you be offering an employer contribution (match or

  18. ADP, Morningstar Launch Managed Accounts for Small Business 401(k)s

    ADP and Morningstar join other small plan providers that have partnered on managed account offerings. Plan provider Ascensus partnered with Franklin Templeton on an offering in 2022, and Vestwell partnered with Franklin Templeton on an adviser managed account offering in 2021. ADP is the second largest 401(k) recordkeeper for plans of under $10 ...

  19. Small Business Owners: Getting the Biggest Bang for Your ...

    The Safe Harbor 401 (k) plan checks a lot of boxes There's no lack of choices when it comes to retirement plans — from IRAs and Roth 401 (k)s to SIMPLE and SEP plans. But not all are inexpensive to establish and easy to maintain. That's where a Safe Harbor 401 (k) can be ideal for small business owners looking for maximum benefits.

  20. Best 401(k) Plans Of 2024

    $95 per month, $1,140 annually 0.83% of AUM

  21. How to Find & Calculate ADP 401(k) Fees

    In our most recent Small Business 401 (k) Fee Study, we found that ADP plans cost small businesses an average of 1.47% of plan assets each year, with their admin fees totaling about $314.08 per participant.

  22. Small-business retirement plans

    SE 401(k): Self-employed individual or business owner with no employees other than a spouse. SEP IRA: Self-employed individual or small business owner, primarily those with only a few employees. 1. Fidelity Advantage 401(k): Small and medium- sized businesses looking to offer a 401(k) for the first time. SIMPLE IRA: Self-employed individuals or businesses with 100 or fewer employees.

  23. 401k Plans for Small Businesses

    Fidelity can help you design 401 (k) plans for your small business with more than 20 employees. Offer competitive retirement benefits to your employees.

  24. Retirement Plans for Small Employers and Self-Employed

    An exchange for higher required employer contributions, a Safe Harbor 401(k) Plan and a Qualified Automatic Enrollment 401(k) Plan may allow you to avoid ADP and ACP testing altogether. ... Choosing a retirement solution for your small business. It has a chart that compares the key features of IRA-based Plans and Qualified Plans. Donald: ...

  25. ADP vs. Paychex: Which is best in 2024?

    Roll by ADP pricing. While ADP offers a few tools that can be used for processing payroll (including Run, Workforce Now and GlobalView), Roll is the company's small-business payroll platform.

  26. ADP

    ADP is a leading provider of retirement services and 401(k) plans for businesses and individuals. With ADP, you can enroll in or change your benefits, view your pay statements and tax information, manage your investments, and plan for your future. Visit ADP to access your account or register as a new user.