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Review: Guideline 401(k)

Guideline is a new player in the 401(k) space, and is attacking the problem of expensive, difficult to administer and use retirement plans by developing unique technology coupled with smart design. Guideline was founded in 2015, and has a strong integration with Gusto, one of the leaders in small business payroll. 

 

 

Guideline is probably best for cost conscious companies that do not yet offer a 401(k) plan, or that have under $3 million in assets. Guideline’s payroll integrations will make it easier to administer than many traditional providers, especially for fast growing companies. 

 

 

Guideline 401(k) has several important differences from traditional small business 401(k) providers:

 

 

Unique Features of Guidelines vs. Traditional 401(k) Vendors

 

  • Virtually no employee fees: Unlike most 401(k) providers, who charge asset based fees to the participants, Guideline does not seek to make a lot of money out of the employees’ savings.
  • Monthly employer fees: Guideline charges the employer (instead of the employees) for the benefit; some companies may find this more costly than a traditional vendor, where most of the costs are borne by the employees. 
  • Easy payroll integration: Guideline saves business owners time by linking payroll with the 401(k) system, eliminating time consuming (and error prone) administrative work.
  • Intuitive user interface: While many of the traditional providers are catching up with their web experience, Guideline has the well designed user interface that you’d expect from a Silicon Valley technology company.
  • Likes small business plans: This provider is happy to serve companies that do not yet have plans, and companies that have plans in the hundreds of thousands of dollars. This is different than most traditional providers, who only want to work with companies that already have millions in 401(k) assets.
  • Startup recordkeeper: Guideline built a recordkeeper from the ground-up, so the 401(k) does not live in an established, highly-resourced Wall Street firm.

 

Guideline 401(k) Pricing

 

Guideline has a unique pricing model in the industry, charging a fixed, per employee fee to the employer and only charging the employees for the fund fees.

 

 

  • Employer fees: $6 dropping to $4 per employee per month based on the number of employees, with the first 100 being $600 per month, and the 101st employee costing $5 per month.
  • Employee fees: 0.25% per year of assets plus approximately 0.10% per year in fund fees.
  • TPA fee of $1,500 per year.
 

Fiduciary Protection

 

Guideline offers investment fiduciary coverage as a 3(38) fiduciary. This means that Guideline is responsible, and takes legal liability for, choosing and monitoring the investment options in the plan.

 

Guideline also acts as a 3(16) fiduciary. A ERISA 3(16) fiduciary is an administrative fiduciary, and is responsible for managing the day to day operation of the plan. Most 401(k) providers do not offer this feature, and it is an important differentiator. 

 

Guideline 401(k) Payroll Integrations

 
  • Gusto
  • Onpay
  • ADP Workforce Now
  • ADP Run
  • Zenefits
  • Square

 

 

Not all providers offer payroll integration. Payroll integration is important because administering a 401(k) can be very manual and error prone in a fast growing business. As the plan sponsor (the company sponsoring/offering the retirement plan), you are responsible for making sure that when employees make changes in payroll they are reflected in the 401(k). For example, if an employee reduces their savings rate from 8% to 4%, or if they get a raise, the person running the plan is legally required to make sure that the correct amount of money is taken out of the employee’s paycheck and deposited into their 401(k) account. There can be large fines for getting this wrong, so this is an important feature that works right out of the box for this vendor.

 

Feature Overview

 

Guideline 401(k)

 
Client Size Small businesses and startups with 1 to 500 employees, including companies without any retirement assets (startup plans)
Investment Options

Large number of low cost, passive investment options

No target date funds

Low cost model/managed portfolios

All in Cost Overall low cost; details below
Fiduciary Coverage

3(38) Investment Fiduciary

3(16) Administrative Fiduciary

Payroll Integration

Yes, integrates with: Gusto, ADP Run, Onpay, ADP Workforce Now, Zenefits, and Square.

Pricing Details

Employer fees: $8 per month per employee paid by company

Employee fees: 0.06% of assets for managed portfolio, slightly higher for individual EFTs

 

Overall Guideline’s cost is typically high for the company but very low for employees

Setup Fee $500
Employee web experience Excellent!
HR portal Good
401(k) Recordkeeper Guideline
Mobile App? No

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Guideline Overview

 

Guideline’s founder,  Kevin Busque, says he was motivated to found Guideline after he noticed that the traditional 401(k) he had at his previous startup did not serve his employees well. He wanted to create a 401(k) that helped small business employees save for retirement, and make it easier for small business owners to manage their company’s retirement plan.

 

 

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