Shopping for a small business 401(k) can be a pain – it’s hard to know how much each option costs and what you get. While I can’t give advice in a blog post, I can provide a little information to help you understand your options.

At the highest level, you can put small business 401(k) options into one of two buckets:

  • “Do it for me” 401(k)s that provide near turnkey solutions
  • “Do it yourself” (DIY) 401(k) options that can help you save a little money, in exchange for you doing much of the work.

When choosing a small business 401(k) provider, ask yourself:

“How much time and energy do I want to spend becoming a 401(k) expert and managing the company’s 401(k)?”

If you’d rather focus on other things (like growing your business or um… origami) then you should consider a “do it for me” small business 401(k) option that comes with 3(16) fiduciaries that will do much of the work and reduce your legal liability.

Of course, you could cut some costs if you take on the work and the legal liability (see this post for a discussion of 401(k) costs). If that’s you, then there are small business 401(k) providers you should check out (we’ll talk more about that later).

So, how much work is required to offer a 401(k)? How much time will you spend? Below is just a partial list of your key fiduciary responsibilities. You be the judge.

[![401(k)]( "401(k)")](
Setting up and managing a 401(k) is a big responsibility that requires a lot of work to get right. While I set up and manage 401(k) plans for a living, I certainly would never do it as a hobby (I like ceramics too much).

“Do it for me” Small Business 401(k)s

Luckily, there are options that will do most of the work for you (and take on a lot of the legal liability). These solutions come with retirement experts that take care of the day-to-day operations, so you can focus on other things. They’ll also handle the legal stuff and government filings for you.

You’ll still need to be involved somewhat – you’ll need to select the right provider and make a few simple decisions about how you want the 401(k) to work. After that, they’ll do the rest, leaving you to sit back and monitor them from time to time. So, if you’re not interested in becoming a 401(k) plan administration expert, a “do it for me” 401(k) is a pretty smart choice.

But, finding out exactly how much work and liability providers will take on can be a challenge (all providers say they make it easy for you). Luckily, there is one simple question you can ask that will help cut through the marketing hype and get to brass tacks…

That simple question is: Are you a 3(16) fiduciary?

If they say no…

Then they likely won’t sign your IRS forms, won’t review and document hardship withdrawals, and may not take on liability for selecting investments, etc.

If they say yes…

Then you’ve found a solution that will likely take on most of the work for you and, hopefully, indemnify you in writing for much of the legal liability.

“Do it for me” solutions don’t have to cost that much. Below are estimated costs for two providers. For legal reasons (boo lawyers) I’m not yet allowed to provide the name of the other option, but email me and I’m happy to make referrals!

[![401(k) providers]( "401(k) providers")]( business 401(k) providers
## **DIY 401(k) options for small businesses**

A DIY solution could be a good option if you are really familiar with the 401(k) market, 401(k) investments, and 401(k) plan administration rules (trust me, there are a lot of them). This is like remodeling your kitchen yourself – you’ll be responsible for selecting the materials and assembling them to create a custom solution for you.

If you have a ton of time to spend (and the right expertise), you can save a little money by doing everything yourself.

But, to be clear, you’ll have a lot of work to do and it can be rather time-consuming. Here’s just a partial list of what you’ll be responsible for:

Failing to properly perform and document any of these (or other) tasks can result in significant penalties. So, cross those Is and dot those Ts. Well… you know what I mean.

If, after all this, you are eager to do it yourself, then you might want to consider a low-cost small business 401(k). Below are typical costs from a few different providers (again, our stodgy lawyers are making me hide their names, but email me and I’m happy to make referrals):

[![small business providers]( "small business providers")]( business providers
So what type of 401(k) do you think is best for you? If you’ve set one up yourself and manage the day-to-day operations yourself, how easy was it?