Vanguard 401k for my office?

I am in charge of selecting the 401k for my office. I like the low expenses of the Vanguard funds. Here is my question...how much should a 3rd party administrator cost our office each year? There are 20 employees.

cost of 3rd party administrator (tpa) should be about $1300 + $100 per participant. A complex plan will be more and an easy to run plan less. The investment option choice also has an impact on fees. If you were to go with Vanguard then you'd be looking at lowering your fees but if you're looking at a schwab or brokerage account option the fees should go up (there is a lot more work involved for a tpa). I don't like Fidelity but that's just a personal preference...I also am not fond of insurance products. Most are ultimately too expensive....but that's a good start on what to expect for fees.

What you need to do though is find a tpa that you are comfortable working with. Unless you have a super basic plan, the TPA is what makes a plan go and work well. The funds, suprisingly, are secondary. You will never be happy with your plan unless you're happy with your TPA. And a good TPA will give you quality fund choices....They will bring providers that will work well for you and your company based upon YOUR needs and abilities. As an example: there are entities out there that have no frill education, systems, and barebones products but offer great funds...these work well for a professional services company with low turnover. But a manufacturing entity or a a company with higher turnover might need the educational piece a little bit more and thus have the need for a slightly higher priced plan. A good TPA will talk to you about YOUR company and not the plan that they are going to sell you.

Interview multiple TPA's and disregard any of them that steer your towards a specific company. If they don't come to the table with multiple options and allow YOU to make the choice then they aren't a true Third Party Administrator...they're a paid shill for a company; except they're using your expense ratios for payment.

I put a plan through AXA, and the administration was very costly--thousands per quarter. I switched it to Schwab. Not only do the employees have more choices with their investments, but the plan costs much less. I also pay a pension administrator a yearly fee-there is a lot of ongoing paper work, tax issues, etc. to administer the plan, mine has to be reviewed by an actuary on a yearly basis. I think the price depends upon the # of employees. So, you are looking at two kinds of admin expense-the cost to administer the plan, and the costs associated with trading on the retirement account. Call Schwab. I have never been happier since switching it over. Really shop it around. The differences in cost and services shocked me. I found that putting it through an insurance company was the worst thing imaginable. Good luck!

p.s.-I don't work for schwab so I have no reason to promote them, but you can buy vanguard, fidelity, third avenue value, dreyfus, laudus, American, and literally hundreds of different funds through a schwab account, as well as individual stocks, etf's, bonds, and cd's with fdic guarantees, money markets, etc... It's just awesome.

Vanguard is a pretty good plan. If I were you, I'd look into a couple of different companies. There's also American Funds which is going to be more expensive, but has a phenomenal performance record over the past 15-20 years. There's also Fidelity, Oppenheimer, and Putnam too look at. I'm honestly not sure what the costs are because they are different for every company because of the difference of employee numbers and such. My choice would be either Vanguard or American Funds though.

melissa sometimes we get so caught up in fees taht we foregt about performance and so forth. yes vanguard has low fees but why don't the best fund managers work for them. Would you want to have your anniversary dinner at burger king just because it is less expensive? Sometimes in life you pay for what you get. There are actaully 40k plans that are offered in what is called a bundled prodcut meaning they do the adminstrating investments all together for one price. They are actually very competive. I have probably over a dozen providers that i can work with some better then others. AS mentioned american funds has a great track record typically and has decent costs. I would love to speak with you more and help your company as I can have respresentatives of the different plans/companies directly sepak with you. Give me an email @ kyle.freda@morganstanley.com I would love to speak further.

Cheers

Shop around with a couple of funds including Vanguard, Fidelity, and one more. But I would try very hard to land with Vanguard. They really do have the lowest fees per funds overall and those fees over the long run will actually beat some funds who may make a little more since their costs will be higher.
I would also attempt to get as many INDEX Funds into your company since they have a good history of beating managed funds over the long run. (and have lower fees Since there are no managers to pay since they simply follow and INDEX.

I won't answer your question but I will give you some advice in selecting funds.

Since we are in the beginning stages of a bear market, you should invest in a "bear fund" or a "bond fund" not a regular mutual fund.

If you invest for the long term in a "regular mutual" fund right now, chances are quite high that your investment will lose money over the next few years.

On the other hand, if you put it in a bear fund, you stand to make money.

I can't speak to Vanguard in particular, but I would be suprised if they don't offer these two types of funds.