Small Business Owner Interested in Vanguard Small Business 401k
Small Business Owner Interested in Vanguard Small Business 401k
So, I bought an established business last year with a business partner and we have 5 fulltime employees. We are interested in offering a retirement savings program to them. I'm very familiar with Vanguard from a Roth IRA/Brokerage account perspective, but as a new business owner and still learning all the complexities of HR, taxes etc., I want to learn more before diving into options that could impact not only my finances but that of others.
My questions:
1. Does anyone have any experience with Vanguard's program? Any insight or should I just call them and talk through it? Should I be looking in a completely different direction for such a plan?
2. Does Vanguard provide advice for investment selections for my employees or is that through another entity? If so, how is that charge included?
3. What is the cost of the plan from an administrative standpoint?
4. Does Vanguard interface easily with most HR firms for pre-tax deductions before paychecks are transferred to employees?
5. Is there an option with this plan for the employee (or me) to make Roth contributions as well as traditional pre-tax?
I'm sure these seem rudimentary but this is a new landscape for me and I always value the things I learn here.
My questions:
1. Does anyone have any experience with Vanguard's program? Any insight or should I just call them and talk through it? Should I be looking in a completely different direction for such a plan?
2. Does Vanguard provide advice for investment selections for my employees or is that through another entity? If so, how is that charge included?
3. What is the cost of the plan from an administrative standpoint?
4. Does Vanguard interface easily with most HR firms for pre-tax deductions before paychecks are transferred to employees?
5. Is there an option with this plan for the employee (or me) to make Roth contributions as well as traditional pre-tax?
I'm sure these seem rudimentary but this is a new landscape for me and I always value the things I learn here.
Re: Small Business Owner Interested in Vanguard Small Business 401k
Hello
Also look into a different option of Simple IRA with Vanguard. No fees to have Simple IRA for your business.
Only down side Is that maximum you can contribute for yourself is not as big amount as in 401 k and for doing that you have to match 3% of your employees contributions.
I still find Simple IRA is very less expensive to run for small business as compared to 401k
Just another idea to offer retirement to your employees
401k plan for small business sometimes be very expensive and Lot of work. I am not discouraging you from having 401k but just presenting you with another idea.
Also look into a different option of Simple IRA with Vanguard. No fees to have Simple IRA for your business.
Only down side Is that maximum you can contribute for yourself is not as big amount as in 401 k and for doing that you have to match 3% of your employees contributions.
I still find Simple IRA is very less expensive to run for small business as compared to 401k
Just another idea to offer retirement to your employees
401k plan for small business sometimes be very expensive and Lot of work. I am not discouraging you from having 401k but just presenting you with another idea.
-
- Posts: 201
- Joined: Mon Jan 09, 2012 3:09 am
Re: Small Business Owner Interested in Vanguard Small Business 401k
I set up a personal 401k at Vanguard a couple years ago for my hobby business, and have made meaningful contributions.
The problem for me is that I want to do a Roth conversion of a non-deductible IRA that I have; as many know, the rub is that conversions must be made proportionally across all your tax-deferred non-Roth IRA balances...which can be a problem.
As I understand it, 401k balances are exempt from these proportional conversion requirements. So, it could be compelling to roll over taxable IRA accounts into a solo 401k (as most institutional 401k plans do not permit IRA rollovers into the plan), shielding those funds from a required proportional conversion of the remaining zero-tax amount.
Unfortunately, Vanguard does not allow such rollovers into their Solo 410k plans, as far as they informed me last year. So, I have transferred the Vanguard Solo 401k to eTrade, which has stated that they do permit rollovers into these plans. However, I have not yet tested this, so..tbd.
I would appreciate hearing from anybody else who has successfully accomplished a rollover to a Solo 401k plan at any provider.
The problem for me is that I want to do a Roth conversion of a non-deductible IRA that I have; as many know, the rub is that conversions must be made proportionally across all your tax-deferred non-Roth IRA balances...which can be a problem.
As I understand it, 401k balances are exempt from these proportional conversion requirements. So, it could be compelling to roll over taxable IRA accounts into a solo 401k (as most institutional 401k plans do not permit IRA rollovers into the plan), shielding those funds from a required proportional conversion of the remaining zero-tax amount.
Unfortunately, Vanguard does not allow such rollovers into their Solo 410k plans, as far as they informed me last year. So, I have transferred the Vanguard Solo 401k to eTrade, which has stated that they do permit rollovers into these plans. However, I have not yet tested this, so..tbd.
I would appreciate hearing from anybody else who has successfully accomplished a rollover to a Solo 401k plan at any provider.
Re: Small Business Owner Interested in Vanguard Small Business 401k
A full fledged 401k plan for 5 employees isn’t going to be cheap.jbow44 wrote: ↑Tue May 17, 2022 9:48 pm So, I bought an established business last year with a business partner and we have 5 fulltime employees. We are interested in offering a retirement savings program to them. I'm very familiar with Vanguard from a Roth IRA/Brokerage account perspective, but as a new business owner and still learning all the complexities of HR, taxes etc., I want to learn more before diving into options that could impact not only my finances but that of others.
My questions:
1. Does anyone have any experience with Vanguard's program? Any insight or should I just call them and talk through it? Should I be looking in a completely different direction for such a plan?
2. Does Vanguard provide advice for investment selections for my employees or is that through another entity? If so, how is that charge included?
3. What is the cost of the plan from an administrative standpoint?
4. Does Vanguard interface easily with most HR firms for pre-tax deductions before paychecks are transferred to employees?
5. Is there an option with this plan for the employee (or me) to make Roth contributions as well as traditional pre-tax?
I'm sure these seem rudimentary but this is a new landscape for me and I always value the things I learn here.
https://skylinefinancialnw.com/wp-conte ... hedule.pdf
Also look into Ascensus, Employee Fiduciary and Guideline. There are different levels of service in terms of how much help you want in terms of employee advice, administration or fund selection. It’s going to be kind of pricey for 5 employees.
A Simple plan would be a lot cheaper but wouldn’t allow as high of contribution limits.
Re: Small Business Owner Interested in Vanguard Small Business 401k
Good information.
Thanks!!
Thanks!!
Re: Small Business Owner Interested in Vanguard Small Business 401k
I had heard vanguard solo 401k now accepts roll ins.grayparrot wrote: ↑Tue May 17, 2022 10:52 pm I set up a personal 401k at Vanguard a couple years ago for my hobby business, and have made meaningful contributions.
The problem for me is that I want to do a Roth conversion of a non-deductible IRA that I have; as many know, the rub is that conversions must be made proportionally across all your tax-deferred non-Roth IRA balances...which can be a problem.
As I understand it, 401k balances are exempt from these proportional conversion requirements. So, it could be compelling to roll over taxable IRA accounts into a solo 401k (as most institutional 401k plans do not permit IRA rollovers into the plan), shielding those funds from a required proportional conversion of the remaining zero-tax amount.
Unfortunately, Vanguard does not allow such rollovers into their Solo 410k plans, as far as they informed me last year. So, I have transferred the Vanguard Solo 401k to eTrade, which has stated that they do permit rollovers into these plans. However, I have not yet tested this, so..tbd.
I would appreciate hearing from anybody else who has successfully accomplished a rollover to a Solo 401k plan at any provider.
viewtopic.php?t=339757
The vanguard solo 401k is not what OP would be interested in. It is for single owner and spouse if employee.
Last edited by JBTX on Tue May 17, 2022 11:09 pm, edited 1 time in total.
Re: Small Business Owner Interested in Vanguard Small Business 401k
Google small employer 401k in this forum and you’ll get some good info. I helped my wife’s employers switch a few years ago for a 30 person company. We went with Vanguard/Ascensus. Seems like the pricing was comparable to the link above. They also hired an advisor to help set things up for about $5000. Not cheap but they make good money for a small company and didn’t want to screw with it.
I think Guideline was the cheapest, but it is pretty simple and all online. Employee Fiduciary was in the middle.
Re: Small Business Owner Interested in Vanguard Small Business 401k
We use Guideline for our company with 12 FTEs. Highly recommended.
Re: Small Business Owner Interested in Vanguard Small Business 401k
I own a small business. I know that Vanguard is cheap, but it’s knock is that it is non-responsive. I have my Company’s payroll and 401k with Paychex and could not be happier. It is relatively cheap and the reps, although constantly changing, try to answer questions within two hours (this is a Paychex rule). I also added a self-directed account feature to the 401k for my investments for $15/month, which allows me to invest in anything that I want.
Re: Small Business Owner Interested in Vanguard Small Business 401k
You may also want to explore a PEO option as well since it could significantly lower your health insurance costs. If you do look for a PEO, look for a smaller one since it will be more cost effective than one of the larger ones. Unfortunately, this takes time. If you have an insurance broker, he can help