Are you putting away enough for your retirement?
The majority of us need to do more. Workers with 401(K) plans through their employers should take advantage of any company match. Also, many employer-based 401(K) plans cover provider fees and expenses on behalf of their employees. Once you leave the employer-sponsored plan, you become responsible for fees, commissions, and expenses. That’s why we completed our review of Empowerment Retirement and its three main competitors. Below you’ll find out what plans offer the most robust choices and slimmest fees.
About Empowerment Retirement
Empower Retirement has been helping American workers attain secure retirements for 110 years. The Greenwood Village, Colorado-based company is part of the Great-West Life & Annuity Insurance company. In 2014, Great-West Retirement Savings services merged with Putnam Investments and JP Morgan Retirement Services to form the current structure of Empower Retirement. The merger made Empower Retirement the second largest retirement services provider in the U.S. It administrates 38,000 plans with 8.5 million participants and $534 billion in assets.
The company states that its mission is to transform retirement planning for the benefit of workers and retirees. Its financial advisers and investment managers create investment strategies that aim to replace—for life—the income they made while working. Empower Retirement provides over 1,000 investment choices, so its participants have ample diversification opportunity. The recommended investment strategies also account for the age, risk tolerance, and goals of each individual participant.
The investment options are varied according to plan types. Empower Retirement provides IRAs for individual customers and 401(K) administration for its corporate clients. It also sells annuities and life insurance. Annuities and life insurance are a key component of successful retirement planning. Through its education and financial advisory, Empowerment Retirement ensures that participants are aware of the benefits annuities and life insurance.
In 2017, the company launched its integrated Health Savings Account (HSA) solution. With the rising cost of health care, HSAs are taking on increased importance within tax advantaged retirement accounts. The HSA provides triple tax benefits:
- Contributions are withdrawn from paychecks pre-tax
- Interest accrues tax-free within the account
- Withdrawals are tax-free provided they are spent on eligible health care items
If money remains in the HSA after retirement, the participant can add the balance to retirement savings.
Empower Retirement’s 401(K) management arm works with a wide variety of client types. It administers plans for mega corporations but also handles small businesses and even micro 401(K) plans. Client companies are from all industries, including non-profits and governments.
CEO Robert Reynolds is quoted on the company website as saying, “We are bringing focus to a single goal; to help people replace—for life—the income they made while working.” To achieve this goal, the company follows three principles:
- Our clients are why we’re in business
- Our people are world-class associates
- We work to win together
Empowerment Retirement offers 401(K) administration services and individual retirement arrangements (IRAs). Whether you are enrolled in a company 401(K) plan or the owner of an IRA, the company provides wide investment vehicle selections and customized retirement strategies. All participants have access to investment advisor representatives. These representatives interview the participants about their goals, risk tolerances, and time horizons. Based on these factors, the adviser recommends suitable funds.
Within the 401(K) plans and IRAs, investors have the choice of hundreds of mutual funds. Many are Great West funds. They are categorized by target retirement dates as well as by industry and geography. Guaranteed income funds are available as well as bond funds. Many account holders ultimately transfer some of their funds to tax-advantaged annuities. Conservative investors close to retirement benefit from Empowerment Retirement’s capital preservation products.
Participants also have access to the Empower Dynamic Retirement Manager, which assists them in managing assets and creating customized strategies. Most participants find the online account screens user-friendly. Participants can easily monitor balances and investments. There are research tools as well as options for re-balancing portfolios. By regularly checking their online account and discussing allocation strategies with Empowerment Retirement investment adviser representatives, participants become empowered to manage their money for success.
401(K) Plan Administration
Companies large and small depend on Empowerment Retirement to administer their 401(K) plans. Managing 401(K) plans is a complex business. Funds must be allocated and distributed correctly. Participants need access to diverse sets of investment vehicles that provide market beating performance for aggressive investors and safety for conservative investors. Regulatory compliance is time intensive. Providers like Empowerment Retirement manage these tasks for client companies, saving the plan administrators time and ensuring again penalties.
Plan sponsors can manage their plans through the online Plan Sponsor Center. This tool provides analytical tools to evaluate plan results. It also features on-demand reporting and fiduciary archives. Professional 401(K) plan administration is vital. It provides participants with opportunities to create secure retirements while saving the client company time by handling the details of plan accounting and regulatory compliance.
Empowerment Retirement provides IRA roll-in services with no transfer fee for accounts with over $30,000. Accounts with lower balances are subject to a $50 transfer fee. There is also a $35 annual account maintenance fee, which is billed quarterly.
401(K) participants are subject to fees based on a percentage of assets. This percentage depends on the plan. Larger companies can negotiate lower fees. One participant stated in a blog post that he pays .75 percent yearly while another reported paying .4 percent quarterly. Also, some plan sponsors cover fees on behalf of the participants, so the amount deducted from participant accounts may not reflect the full administration charges.
How It Compares
We picked a few similar products available on the market to see how they compare. Each of these companies provides IRA options. If you have an old 401(K) plan that you intend to roll over, consider Empower Retirement’s IRA or one of the below three. All provide robust selections of mutual funds, ETFs and cash equivalents.
Where To Invest
With over 1,000 investment options, there are funds for everyone from a young, aggressive investor to a conservative investor in retirement. 401(K) participants benefit greatly from the HSA triple tax savings options. The IRAs offer many options, including capital preservation funds and guaranteed income. Many participants contribute to annuities.
Fees & Commissions
The sponsor may pick up these fees for the participants.
Empowerment retirement goes all out to provide the tools and investment advice the participants need. On the 401(K) sponsor side, Empowerment Retirement administers 38,000 plans with most clients reporting a positive experience.
If you’re in the market for a no-fee IRA, check out TD Ameritrade. Its IRAs are truly no-fee. That means no setup, closeout, or annual fees. As one of the largest online brokers, TD Ameritrade is able to offer 13,000 mutual funds. Investors like TD Ameritrade as evidenced by its 10 million customer accounts that are worth over $1 trillion.
No fees on IRAs make TD Ameritrade one of the better deals in retirement saving.
Robust selections include 13,000 mutual funds. There are also 296 ETFs. IRA options include traditional, Roth, SIMPLE, SEP, rollover, and minor
Fees & Commissions
2,000 of the TD Ameritrade mutual funds charge no load fees. The ETFs are free to trade and have a low 0.5 percent expense ratio. TD Ameritrade also frequently runs promotions that provide free trades and cash bonuses.
TD Ameritrade is an award-winning broker because it provides excellent customer service. Customers benefit from in-depth educational information and advanced financial calculators. Professional investment advice is also available on the phone or at one of the 450 TD Ameritrade branch locations. A fee applies for advisory services.
Ally Invest makes IRA investing easy. It offers many types of IRAs, including traditional, Roth, SEP, SIMPLE, and rollover. The Coverdell Education Savings Account is a good buy for parents investing in their child’s educational future.
Ally Invest has larger costs and more fees compared to TD Ameritrade.
With 8,500 mutual funds to choose from, any investor can find the right mix for his or her IRA. Ally offers a robust selection of ETFs and low-cost index funds.
Fees & Commissions
Ally Invest charges more fees than TD Ameritrade. No-load mutual funds trade for $9.95. There is no trade fee for funds with a load fee. ETFs and stocks trade for $4.95. Few customers qualify for the discounted $3.95 trade fee because it requires making 30 trades in 90 days and having an account balance above $100,000. Investment advisory services cost 0.25 percent of portfolio value.
Ally Invest provides user-friendly screening tools that help investors to efficiently select stocks, bonds, and mutual funds. Investors who manage their own money benefit from the online educational tools and online broker chat.
Investment education website Investor Junkie awards Fidelity the distinction of offering the best all-around IRA. Fidelity ranks as the second largest mutual fund company. Its IRA gives customers access to its own mutual funds with no commissions. If you are a fan of Fidelity’s funds, it makes sense to open an IRA with Fidelity. You also have access to non-Fidelity funds. Over 10,000 funds are available with the IRA as are commission-free ETFs. As of 2018, Fidelity has $2.04 trillion under management.
The commission-free trades for Fidelity funds make the Fidelity IRA the best way to acquire Fidelity mutual funds in a tax-advantaged account.
With over 10,000 mutual funds and commission-free ETFs, there are options to suit all types of investors.
Fees & Commissions
The $7.95 per trade charge for equity trades isn’t the cheapest, but if you want ETFs and Fidelity mutual funds, the fee won’t apply.
Fidelity Investments provides customer service online and over the phone. For more complex issues like investment strategies, the company has investing centers located all across the country. Fidelity Investments also provides investor education seminars.
Retirement savings are crucial to the financial security of millions of Americans. Empower Retirement helps promote retirement savings through its 401(K) administration and IRA programs. It offers a vast number of investment products, so any investor can find the right mix of asset classes. In addition, Empower Retirement devotes resources to investor education at no additional cost. This education is vital to ensuring the future financial security for millions of workers. As a result of these helpful programs and investment choices, we give Empower Retirement 5 stars.