Learn about 401(k) Business Costs
Like healthcare or any benefit program, 401(k) services come with a cost to your business. But where healthcare costs can run between $3,615 (for single coverage) to $8,508 (for family coverage) per employee per year*, a 401(k) costs only a fraction of that amount.
401(k) charges typically include a one-time fee to establish your plan and an ongoing annual or monthly fee to manage your account. These costs cover record-keeping, personal support from an account manager, and product and service improvements.
The per-employee administration cost of a 401(k) varies dramatically across the industry. Most 401(k) providers concentrate on serving large businesses and are neither priced nor prepared to serve sole proprietors or businesses with fewer than 50 employees. To ensure you’re getting the lowest possible prices, follow this guide:
| A business with ... | should pay less than ... |
|---|---|
| 1 employee (self-employed) | $200 per year. |
| 2 to 15 employees | $1,200 per year. |
| 16 to 50 employees | $1,800 per year. |
| 51 or more employees | $2,500 per year. |
Some providers “nickel and dime” small business owners with fees for common services like preparing tax forms, rolling over funds from a previous 401(k) plan provider, and more.
- Determine whether you will be charged by the number of employees at your company or the number of participants in your 401(k) plan (participants is preferable).
- You’ll want to avoid paying excessive or additional charges for expected services like IRS form preparation, discrimination testing, or the transferring of assets from another 401(k) plan.
- Make sure you receive a fee schedule or quote that shows every fee your company could possibly be charged.
We are dedicated to meeting the needs of small businesses, and price our services accordingly. Compare the first-year cost of a ShareBuilder 401(k) for a 10-person company to typical industry pricing:
| ShareBuilder 401(k) | Typical Industry Pricing1 | |
|---|---|---|
| One-time setup fees | $495 | $1,107 |
| Administration fees2 | $1,140 | $2,506 |
| Total first-year fees3 | $1,635 | $3,613 |
We invite you to review ShareBuilder’s complete fee schedule, or call us to discuss costs at 800.943.6108, option 1. We’re happy to be of service!
*2006 Annual Employer Health Benefits Survey, Kaiser Family Foundation and Health Research Education Trust.
1Typical industry pricing is based on a competitive survey done by PAi and ShareBuilder of leading 401(k) providers in December 2006. Annual fund and asset management fees include average fund expense ratios and any additional 12b-1 fees, asset management fees, fund portfolio turnover fees, and wrap fees the provider charges.
2ShareBuilder charges a simple monthly administration fee based on the number of participants only ($95 per month or $1,140 annualized in this example). Many providers charge an annual administration fee plus an annual eligible employee or participant fee!
3First-year fees are based on a company of 10, with 8 participating employees. ShareBuilder pricing is based on enrollment in a ShareBuilder 401(k) PLAN4TEN. As you’d expect, pricing and savings may vary depending on the number of participants.