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Author: RonFL Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25223  
Subject: 401k administrators Date: 12/29/1999 6:49 PM
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I am new, so be kind.

I have a small firm, and we have gotten it to the point that we are planning to offer a 401k plan to the employees, which are a total of four. I have done very, very limited research into the administration of the plan, and wonder if there are any helpful locales or suggestions that can be contributed from the Fools.

Basically, we intend for the firm to absorb the fees, and are looking for simplicity and good choices (an index fund maybe in the mix?).

I have gotten two referrals --- a bank and an insurance firm, and I don't need the headaches the small print generates. Is there some hope out there?

Thanks!
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Author: TheBadger Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5440 of 25223
Subject: Re: 401k administrators Date: 12/29/1999 6:55 PM
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FWIW, stay away from banks & insurance companies. Both will offer products & a program claiming little or no cost to the plan sponsor (namely you). Unfortunately, these institutions pack their products with high, higher, highest loads and fees. No such thing as a free lunch here.

Instead, I would head for the big mutual fund companies; Vanguard & Fidelity come immediately to mind but I am sure there are others as well. All of these institutions have competitive programs which should work well for a small employer.

TheBadger




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Author: W401K Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5448 of 25223
Subject: Re: 401k administrators Date: 12/30/1999 6:53 AM
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The previous reply stated that you should go directly ot Vanguard or Fidelity and avoid the insurance companies or the banks. I agree totally. However, Fidelity and Vanguard MAY have minimum requirements in terms of assets and employees before they will take on your business. Call them and find out. IF they won't take your business then the next best alternative is a bank. You can get a bank to handle your 401k and the only extra charge will be the bank collecting 12b-1 fees. Most banks offer funds that waive the loads for 401k Plans, be careful though, not all waive them. You should never have to pay loads, front or back, for a 401k!! Since this will be a new Plan, the 12b-1 cost won't be sizeable until the Plan grows in terms of assets. You should look for a SIMPLE 401k since you have less than 25 employees. SIMPLE 401ks are less expensive and have a much lower administrative and reporting requirement. Should you need help finding a bank in your area of the country please e-mail me and I'll try to help out. Whatever you do, stay away from the insuirance companies.

Bill

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Author: don1941 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5454 of 25223
Subject: Re: 401k administrators Date: 12/30/1999 9:21 AM
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Several years ago I had to deal with a 401K plan from a smaller company (<50 employees) and the plan administrator basically stole tons of money from the plan. In my opinion, it would be worth whatever Vanguard charges for the peace of mind knowing that your funds are as safe as they can be. Avoid any kind of insurance company. Fear banks for reasons already stated. Do not use an individual administrator.

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Author: ACorkos Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5486 of 25223
Subject: Re: 401k administrators Date: 12/31/1999 1:18 AM
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I'm starting a retirement plan for my business in 2000. There will be three participants in the plan - myself and 2 full time employees. I found a third party administrator (a CPA specializing in retirement plans) who is setting up a Safe-Harbor 401K - requires a minimum 3% employer contribution (up to 15%) and allows up to 15% employee contribution ($10,500 maximum). This type of plan worked best in my situation.

The best part, though, is that the money can be invested any way I want. Initially, I will be investing the contributions as one collective "lump" in a business account at E*Trade. When all the participants have enough contributed to meet the $1000 account minimum, then the money will be distributed into 3 self-directed accounts.

The Safe-Harbor 401K was the best plan for my situation - get some advice as to what type of plan would work best for you. The cost was $1000 to set up the plan, and it will run $1500 a year for the record keeping and tax filing. That cost seemed reasonable to me, and it lets me have virtually unlimited investment options. Stay away from banks and insurance companies. I dont know about you, but I'm already paying my bank and insurance companies more than I care to.

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