7 Best 401(k) Plans Of 2024

For this review, Forbes Advisor began with an extensive list of the most popular 401(k) companies on the market today. We then rated these companies based on factors like setup costs, administrative fees, employee costs, funds available and services provided on top of 401(k) administration.

From there, we searched through the top contenders to see who really stood out in performance for certain areas. By looking deeper into the individual specialties of these 401(k) companies, we were able to identify the best contenders for your business.

*Note: Set-up fees, administration costs and other fees typically depend on what type of plan you select and the size of your company. For the examples above, we’ve illustrated the costs for a Safe Harbor plan. Depending on the needs of your company, costs could be different.

The right 401(k) provider for your business depends on a few factors.

First, you should decide whether you want one company to handle both the investments and the administrative work, or if you’d like to divide it between two. Dividing between two means managing multiple accounts but gives you the flexibility to find the best fit for each part of running your 401(k).

In terms of reviewing companies, cost is an important factor. You should weigh both the costs for you as the employer as well as what your employees would pay for using the plan. If employee costs are too high, they might not enroll at all.

You should also ensure the 401(k) plan provider offers the investments your employees want, especially if you know they want specific mutual funds or a certain other type of investment.

Consider whether the provider has the 401(k) features you want, like whether they offer a Roth 401(k) vs a traditional 401(k) or 401(k) loans. Lastly, consider how they manage customer service, such as whether they offer in-person or online only.

You might also want a provider that offers robust employee education, so your workers understand how their investment decisions will affect their ability to fully fund their retirement.

A 401(k) is an employer-sponsored retirement plan that allows employees to contribute a certain percentage of their pay into a tax-advantaged account, and then determine how they would like to invest.

These types of plans are the most common retirement benefits offered to employees, according to a recent report by the Transamerica Center for Retirement Studies. More than half of employers offer a 401(k) or a similar type of defined contribution plan, per Transamerica. Nearly 90% of companies with more than 100 employees have one, compared to 46% of small businesses.

There’s a good reason why: employees like them. Roughly 80% of workers participate in a 401(k)-type plan when offered, per Transamerica, saving 12% of their pay.

Why do employers offer them? The top three reasons include:

• Help employees save and prepare for retirement (57%)
• Increase job satisfaction among employees (55%)
• Inspire loyalty among employees (50%)

There are two main types: Traditional 401(k)s and Roth 401(k)s.

In a traditional 401(k), contributions are made before income taxes are applied, thereby lowering your current tax bill to Uncle Sam. Your account then grows tax-free over time, and faces income taxes when you withdraw from your account.

A Roth 401(k) works in reverse. You pay the taxes up front, and then never have to cut a check to Washington again. This option makes sense for those in a lower tax bracket then they imagine they’ll be in when they start taking money out of their retirement account, typically decades in the future.