The Best Employee Retirement Plans for Small Businesses 2025

Once your business has a team of employees, it’s best to set up an employer-sponsored retirement plan, which can help improve employee retention rates. Some states even require certain types of employers to offer 401(k) plans. However, finding the best type of employee retirement plan and provider can become an arduous challenge with so many choices available. To find the right employee retirement benefits providers for your business, look for vendors that offer plan design, administration, recordkeeping, auto-enrollment and easy integration with company payroll.

With so much at stake, it’s important to identify the right retirement plan for you and your organization. Source: ADP

The following employee retirement plan providers may not have scored as high as our best picks above. Still, they all offer reliable service and an attractive mix of options that could make one of them the best fit for your employees’ retirement plan needs.

Vanguard – Best for Investment Flexibility

As one of the oldest and largest mutual fund companies in the world, Vanguard offers a wide range of mutual funds and ETFs for account holders to choose from. The company also offers retirement services, including individual retirement accounts and some small employer-sponsored plans.

Vanguard shines because of its massive list of cost-effective investment options. Long considered the king of cheap investing, Vanguard has been helping individuals and small businesses save for retirement for more than 40 years. Of its actively managed funds, 86 percent have outperformed their peers over the past decade. What’s more, the average fund expense ratio at Vanguard is 84 percent lower than the industry average. Another bonus is that the minimum initial investment required to open a small business retirement account is the price of one share.

Fidelity – Best for the Self-Employed

Fidelity is one of the largest privately owned financial services companies in the world. The firm provides a wide array of services, including individual retirement accounts and employer-sponsored retirement plans. Many of the IRA options can be opened without an advisor, including simplified employee pension (SEP) IRAs, which are a great cost-effective option for entrepreneurs. Accounts can be set up quickly and easily online.

Within these retirement accounts, particularly the IRA options, Fidelity customers get access to a full array of investment options. Users can trade U.S. stocks, ETFs and options for zero commission, and there are no annual fees for SEP IRAs. If you’re self-employed and want a retirement account you can set up online, Fidelity is a great option that has a well-deserved excellent reputation.

Guideline – Best for Compliance

Guideline is a relatively new company that has a particularly strong safe harbor 401(k) offering. Safe harbor 401(k) plans are great for small business owners because they allow company owners to maximize their own contributions, even if not all of their employees participate in the plan. Business owners who use a traditional 401(k) instead may be prohibited from maximizing their contributions, because the IRS imposes limitations based on employee participation and contribution rates.

Because Guideline is an online option, it’s easy to set up and relatively cost-effective. The company’s basic plan starts at $49 per month, plus $8 per employee per month. Guideline’s other plans, which offer additional features, cost $79 and $129 per month. Employees are also charged additional account fees, but they are minimal: 0.08 percent annually.

Shelton – Best for Customer Support

Shelton Capital Management differentiates itself in a competitive market by providing its clients with concierge-level customer service and support, included with all of its 401(k) retirement plans. Shelton’s commitment to service can be seen in other areas like on-site live investment education sessions designed to help boost participation rates. U.S.-based reps are available to answer calls from participating employees and provide ongoing support wherever needed.

The company offers 3(38) investment fiduciary services with a focus on supporting small business owners and employees with 401(k) plans. Public pricing is not available for Shelton’s 401(k) plans, but ongoing costs will typically include investment fees, often as a percent of total assets. Other costs include administration fees and individual service fees.

Perfect401k – Best for Easy Implementation

Perfect401K offers one of the easies implementation processes we’ve seen. If you want to attract top talent with a competitive benefits package but you’re intimidated by the thought of implementing a retirement plan, Perfect401(k) may be the best fit. The company makes it easy for business owners to set up a retirement plan for their employees by assigning each business a designated implementation team that handles the plan design, enrollment and training.

The Perfect401(k) plan costs employers $375 per quarter ($1,500 annually) for 10 employees, plus $7.25 per additional employee each quarter. Employees are charged 0.67 percent or less of their account balance each month to cover the cost of mutual funds, investment consultation, educational tools and other management fees.

Business owners can expect to pay $20 to $200 per month for their employee retirement plan, plus $4 to $15 per employee per month to cover the cost of administration and recordkeeping.

Additionally, when small business owners set up a retirement plan, there are usually annual fees for administration, recordkeeping and filing preparation. Providers also may charge fees for serving as a plan fiduciary, conducting on-site visits, or preparing educational materials or newsletters. Some companies may charge separate annual advisory fees for assisting with plan design and serving as a resource for employees who need assistance.

Separately, many costs of small business retirement plans are covered by the expense ratios of the investments included in the plan. These fees are paid by mutual funds to the plan provider based on the amount of assets that plan participants have invested in the fund.

Employee retirement benefits providers have many common features. Most offerings include certain core services, such as plan administration, recordkeeping and preparation of IRS filings. Some also handle plan design (investment selection) and employee enrollment, serve as a plan fiduciary, and sometimes even manage company payroll.

Onboarding

Benefits need to be explained to employees as part of their enrollment. Some providers offer an introduction and/or training course to educate employees about the benefits available to them.

Most providers make it easy for administrators to see who’s enrolled and who’s waiting for any approvals. Source: ADP

Easy online administration

You should be able to handle your plan’s benefits administration online without ever having to visit an advisor’s office.

Recordkeeping and compliance

Plan providers should handle all aspects of plan compliance, annual filings and necessary documentation.

Investment selection

Most providers help you pick the investment options to include in your plan and guide you in employee eligibility and company 401(k) matching.

It’s a good idea to consider the types of funds you and your employees would like available for investing. Source: Sharebuilder401k

Mobile enrollment for employees

Increasingly, people spend more time on mobile devices in lieu of PCs. Employees should be able to handle their account setup and maintenance via a mobile app or browser.

Employee resources

Plan providers should serve as a resource for employees who have questions about their benefits, though most don’t provide investment advice.

Artificial intelligence

Many retirement plan providers now provide AI-powered “robo advisors” to help enrollees plan for the future. This makes retirement planning more accessible for employees, and can help them manage risk.

Retirement benefits can be a big draw for employees. In fact, 81 percent of major employers offer a 401(k) plan, according to a survey from Callan, making it an important benefit to offer to your team. Fortunately, anyone can set up a retirement plan for their small business, but using an independent provider can help you compete with the resources of larger companies. Here are a few benefits of using a professional provider.

Helps to attract and retain talent. Today’s job market is competitive, especially for small business owners looking for workers. The U.S. unemployment rate sits at 3.8 percent as of March 2024. Many industries have faced labor shortages, and the cost of training and onboarding new employees is prohibitive for many businesses. Business owners can use a solid retirement plan as a tool for recruitment and retention. According to Gusto, 40 percent of employees are less likely to leave a job in the first year if it offers a retirement plan.

Improves productivity. Your HR manager will be a lot more productive (as will your employees) if everyone’s retirement benefits are handled centrally by a professional provider.

These providers can ensure that employees have easy access to their retirement accounts

Saves time for recordkeeping. Retirement plan providers have software that makes plan administration and recordkeeping totally seamless and largely automated.

Reduces the pressure of compliance requirements. The professionals who work with retirement service companies are up to date on the regulations and familiar with current best practices. [Related: How to Borrow Against Your 401(k)]

Selecting an employee retirement benefits provider takes some research and careful consideration of your particular circumstances. Even after you settle on a platform, you should reassess it periodically to make sure you’re getting everything you need. Follow these steps to choose the right employee retirement benefits provider for your business:

1. Research providers

Do you plan on starting your business as a sole proprietor? Do you want to open up a small shop in a rural area? Is your business model heavily reliant on digital marketing and web conferencing? Figuring out your business type could greatly determine the business internet plan you decide on for your business needs.

2. Check out reviews

After considering the pros and cons of being a small business owner and establishing your business brand, you’ll want to think about where to host your business. Most of the business internet providers we’ve listed offer relatively vast internet coverage. However, location is still something that should be considered when deciding what business internet plan to use. This is especially important if your team works off of a hybrid work model, where some employees may need to work from home in addition to working on-site. If you decide to make telecommuting a permanent arrangement for your business model, you’ll also need to consider if being a fully-remote team is an option.

3. Evaluate the investment selections

Do you plan on starting your own business as an aspiring entrepreneur or do you have a team already established? Do you have an idea of how many people you plan on hiring or have you closed in on your initial round of employees? If your business size is relatively small, you may be able to utilize a lower-tier business internet plan. When you need to upgrade or switch, most business internet providers will be more than happy to help you transition as your business scales.

4. Review the fees

ETFs and mutual funds charge fees, also known as expense ratios, to cover the cost of operating the fund. Carefully review the investments offered by each plan provider and their associated fees. Even small differences in expense ratios can greatly affect the final value of an employee’s retirement fund over time.

5. Reevaluate periodically

After you choose a provider and set up an account, review both your account and the provider regularly to gauge their performance. Assess both at least annually to make sure you don’t need to make a change.

At Business News Daily, our team of small business experts have been researching employee retirement plans for years, comparing some of the leading solutions across more than 30 key metrics. We considered 23 employee retirement plans and closely reviewed and tested 10 of them before selecting our five best picks above.

Below are the factors we considered when determining our best picks. Each is weighted according to how much the criteria typically influences business owners’ buying decisions.

• Pricing (30%): We considered not just the cost of the employee retirement plans but also plan administration fees, costs to employees, and the number of plans available to choose from.
  
• Enrollment and Onboarding (25%): We evaluated how easy it was to enroll in an employee retirement plan and whether a company offered online and mobile enrollment options.We also considered how much support each company offered when onboarding employees to their program, including explanation of benefits.
  
• Usability (20%): We paid close attention to the ease with which employees could administer their plans and manage funds online. We tested each company’s benefits dashboard and tools like fund rebalancing.
• Customer Support (15%): We examined the ease with which customers can contact the team in need of help. We also considered whether companies gave employees the option to work with financial advisors when administering their plans.
• Expert Insight (10%): Our product reviews are conducted by finance and HR experts who are deeply familiar with employee retirement plans. Given their institutional knowledge of different platforms and firsthand experiences using these programs, we take their judgment into account when determining our best picks.

In addition to scoring each employee retirement plan we reviewed based on this criteria, we also determined the best use case scenarios for each. No two businesses are exactly alike, so we put ourselves in the shoes of different types of small business owners and identify the best employee retirement plan for a variety of needs.

To learn more about how we review and test financial products and services for small businesses, read about our editorial process here. 

Jeff Hale and Dock Treece contributed to this article.