At Emparion, we are a specialized retirement structuring firm. Sure, we set up retirement plans. But the value we bring is more than that.
We often get asked how our 401(k) plans compare to plans at Schwab, Fidelity, and Vanguard. So, we decided to discuss how the different companies work and talk about the pros and cons of different plan designs.
In this post, we will give you 10 reasons why we feel our plans are superior to other providers. Let’s jump in!
Some Background
Every client situation is unique. You may just want a ‘bare bones’ plan. But if you want all the ‘bells and whistles’, you will need a custom plan design.
We offer unique 401(k) plans designed for small business owners, freelancers, and high-income professionals. These plans emphasize flexibility and tax optimization.
Comparatively, Schwab, Fidelity, and Vanguard are industry giants with established reputations in retirement services. Our niche audience is usually looking for tailored solutions.
Schwab, Fidelity, and Vanguard possess decades-long reputations in financial services. They are trusted household names. We differentiate through niche expertise and personalized service. Our growing reputation attracts small business clients.
#1 – Dedicated Plan Administrator
When you set up a plan with Emparion, you get your own personal plan administrator. It’s their job to make sure that you understand how the plans work, are provided with contribution amounts and also to ensure that your plan stays compliant.
We prioritize personal client relationships. Our support focuses on understanding client goals and challenges deeply. Schwab, Fidelity, and Vanguard manage vast client bases, limiting individualized attention. Our boutique service model gives clients direct access.
When you work with other providers, you usually just get an 800 number. So, you never know who you’re going to get and what experience level they are. With many investment custodians, their customer service reps spend most of their time setting up IRAs and SEPs. They have less breath of knowledge when it comes to 401(k) plans and other sophisticated structures.
We specialize in solo and custom 401(k) plans. These cater to specific financial needs and allow greater control. Schwab, Fidelity, and Vanguard offer standardized plans suitable for broader markets. However, their customization is less extensive than Emparion’s tailored options.
#2 – Free Planning Calls
We conduct frequent plan reviews. Our advisory approach ensures clients optimize strategies continually. Schwab, Fidelity, and Vanguard don’t offer much structuring advice. We feel our active engagement improves outcomes.
We focus on maximizing tax savings for high-income earners. Schwab, Fidelity, and Vanguard provide traditional tax-deferred and Roth options but may lack the specialized tax strategies we offer.
#3 – Mega Backdoor Roth
A Mega Backdoor Roth allows individuals to contribute after-tax dollars to a 401(k) and convert them to Roth. This strategy significantly increases the annual Roth contribution beyond traditional Roth IRA or 401(k) limits. High-income earners benefit greatly since it bypasses income restrictions on Roth IRA contributions.
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*Emparion is not affiliated with, endorsed by, or sponsored by these institutions.*
Mega Backdoor Roths are powerful for building tax-free retirement income. They provide long-term tax-free growth. Emparion 401(k) plans allow for the Mega. As a general rule, Schwab, Fidelity, and Vanguard do not have Mega compliant plans.
#4 – Filing IRS Form 5500
Many people don’t realize that 401(k) plans must file tax forms annually with the IRS when a specific threshold is met. When the balance in the account or the balance combined with a defined benefit plan is at least $250,000, then IRS form 5500 is required to be filed.
Because Emparion is a full-service provider, we file form 5500 for your plan as part of our administrative services. As a general rule, Schwab, Fidelity, and Vanguard do not file form 5500s. There are huge penalties assessed if this filing is not completed.
#5 – Cash Balance & Defined Benefit Plans
401(k) plans are great starter retirement vehicles. But Emparion also administers cash balance plans and other defined benefit structures. These plans allow higher contributions and tax savings compared to 401(k)s. Most other providers don’t administer these plans. In fact, we consistently receive referrals from Schwab, Fidelity, and Vanguard.
We also can combine defined benefit plans with 401(k) plans. This can boost overall contributions significantly. Emparion focuses on customized solo 401(k) and cash balance plans. These aim at high-income professionals and small businesses. Schwab, Fidelity, and Vanguard mostly offer standard 401(k) plans, SEP IRAs, and SIMPLE IRAs.
Emparion provides cross-tested plan designs, benefiting business owners. These maximize contributions for owners while controlling employee costs.
#6 – Loan Provisions
Emparion plans allow loan provisions, which most other investments custodians do not allow.
Is a Cash Balance or Defined Benefit Plan Right For You?
Loan provisions in 401(k) plans allow participants to borrow a portion of their vested account balance under specific conditions outlined by the plan. The primary goal of such provisions is to offer financial flexibility to participants without requiring them to permanently withdraw funds and incur early withdrawal penalties.
Loans are limited to the lesser of $50,000 or 50% of the participant’s vested balance. These loans must be repaid with interest, usually over a period of up to five years, although longer repayment terms are allowed if the loan is used to purchase a primary residence.
#7 – Plan Setup and Support
We simplify the plan setup process, providing personalized guidance throughout. Schwab, Fidelity, and Vanguard require navigating larger, more complex structures. While they offer robust customer support, Emparion’s approach is more hands-on and individualized.
We have an onboarding call for all clients who set up new plans. We can even assist with setting up your investment accounts. We assist plan sponsors with fiduciary duties and compliance. Our dedicated model helps mitigate regulatory risks. Schwab, Fidelity, and Vanguard offer fiduciary tools but focus less on custom compliance strategies. Emparion’s niche expertise benefits clients requiring high-touch support.
#8 – Portability
When you set up a 401(k) plan with providers like Vanguard, Schwab, and Fidelity, you are essentially captive to them. What I mean is that even though it’s a legal plan, it solely works on their investment platform.
But what if you change your mind and want to move to another investment provider? These free plans are just not portable. However, Emparion plans will work on any investment platform. Therefore, if you decide you want to move your investment portfolio from Schwab over to Fidelity, it’s easy to do.
#9 – Self-Directed Features
We enable clients to pursue self-directed investment strategies. A self-directed 401(k) plan is a type of retirement savings account that offers participants greater control over their investment choices compared to traditional 401(k) plans.
While traditional plans typically limit investments to a selection of mutual funds, stocks, and bonds, a self-directed 401(k) allows participants to diversify into a wider range of assets, including real estate, private equity, precious metals, and even cryptocurrency, depending on the plan’s specific terms. This enhanced flexibility makes the self-directed 401(k) an attractive option for individuals who want to tailor their investment strategies and potentially achieve higher returns.
Schwab, Fidelity, and Vanguard mainly offer traditional investment options. Emparion’s approach suits entrepreneurs seeking diverse portfolios.
#10 – Planning Webinars and Resources
Emparion’s tax and retirement planning webinars are designed to provide high-net-worth individuals, business owners, and self-employed professionals with specialized knowledge on advanced financial strategies. These webinars cover a wide range of topics, including optimizing retirement savings through custom 401(k) plans, reducing tax liabilities with defined benefit and cash balance plans, and leveraging tax-advantaged investment vehicles.
In addition to expert-led presentations, Emparion’s webinars offer interactive Q&A sessions where participants can receive personalized guidance on their specific tax and retirement concerns. Schwab, Fidelity, and Vanguard do not provide tax and retirement planning webinars.
Final Thoughts
Emparion stands out by offering personalized, high-touch 401(k) solutions tailored to small businesses and high-income professionals. Schwab, Fidelity, and Vanguard remain excellent choices for standardized retirement plans with extensive investment options.
However, Emparion’s focus on customization, tax optimization, and boutique service provides unique advantages. Businesses seeking niche expertise and personal attention benefit most from Emparion’s specialized approach.
