How to Compare 401(k) Brokerage Accounts

According to the U.S. Department of Labor, people in charge of choosing a good 401(k) brokerage account provider for their company are required use fiduciary responsibility. Although many people closely examine fees and choices, comparing 401(k) brokerage accounts requires reviewing a wider array of account functions.

Investment Options

Look for a 401(k) account with diversified investment choices.

When comparing 401(k) accounts, it's important to consider the investment options offered. Good plans have many funds available for different investor types. A well-rounded 401(k) plan will include investments from aggressive to conservative, and a wide variety of stocks, bonds, money markets and guaranteed interest investments.

Fees

Fees for trading and other services can vary by company.

Examining each 401(k) plan's costs to the participants and the company is perhaps the most obvious comparison. Trading expenses should be clearly listed, understandable, and inline with those of other firms. However, other fees such as transfers, rollovers and account maintenance should be compared also. Finally, it's wise to compare plan administration fees that your company will pay.

Accessibility

A good 401(k) broker website should offer easy accessibility for plan participants.

Accessing and transferring funds between 401(k) investments should be easy. When comparing 401(k) platforms, it's important to determine which system does a better job of allowing participants to access trading and account information in a variety of ways, including the Internet, over the phone and via a traditional statement.

Statements

The best 401(k) statements are easy to read.

Another factor to compare is which 401(k) statement most clearly identifies account additions, withdrawals, and gains and losses by position. The statement should be easy to read and clearly show how to quickly get any questions answered.

Experience

Compare experience and track record of each broker.

401(k) brokerage account providers should have experience in the field, be on sound financial footing, and free from litigation and enforcement action. A thorough comparison will include information on how long different providers have provided 401(k) plans and an inquiry with regulators about past or pending complaints or government action.

References

• U.S. Department of Labor: Meeting Your Fiduciary Responsibilities
• Motley Food: 10 Ways to Size Up a Broker
• U.S. News and World Report: How to Tell if You Have a Good 401(k) Plan