I own a C corporation in California. My wife and I are the only employees. We currently have a solo 401(k) plan, but our original third-party provider recently retired and sold the business to another provider. We’re not comfortable with this firm and would like to switch. How do we find out if a company is legitimate? —Dave Taylor, Rolling Hills Estates, Calif.
The first thing you should do when you’re in the market for a new 401(k) plan provider is draw up a request for proposal, or RFP, which details what you’re looking for and your specific requirements, says Blaine Aikin, chief executive of fi360, a fiduciary training service in Sewickley, Pa. Then send out your requests. To help with your search, click here for a list of solo 401(k) and small business retirement plan providers from 401khelpcenter.com.
Another good resource for sizing up 401(k) providers is 401kExchange.com. Similar to LendingTree.com, in which mortgage brokers can vie for the opportunity to supply mortgages, 401kExchange.com gives retirement plan providers the chance to offer retirement plan service quotes. (Fred Barstein, the president of 401kExchange, however, notes that this service is not available for comparing solo 401(k) plan providers.) ( Click here for the Department of Labor’s guidance on how to choose a retirement plan provider.)
Once you’ve identified a couple of providers, head to the Better Business Bureau’s web site , which lists about 4 million free reliability reports on companies and nonprofits. A reliability report will tell you who owns the firm, whether it meets licensing requirements and if there are any outstanding legal disputes. The report will also list complaints, a description of each complaint and how they were resolved, says BBB spokeswoman Alison Southwick.
While you can search for the company on the main U.S. BBB site , if you’re trying to locate a report for a company with a more generic name, for instance, Joe’s Plumbing Service, do a local BBB search. Plug in your zip code and the company’s name. If you can’t find the company you’re looking for, you can request that the BBB perform a free reliability report on the company. Southwick says this process usually takes about two weeks.
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