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Comment by boulos | Hacker News Reader

They don't state which Vanguard funds you'll have access to (though they explicitly say they just use passive ones), but apparently there is an option to have the employee do a custom allocation within their menu of funds. Given the .10% expected fee for the underlying mutual funds I'm guessing they're assuming investor class (like VTIAX), which is pretty fair!

A one-time, $500 setup fee, and $8/month per employee is pretty great. The .03% custodial fee to the employee isn't bad either.

Again the big hurdle for a small startup / business is even being able to offer these (contacting Fidelity and Vanguard is sadly awful as a small person without company history or at least 20 employees). Glad to see competition in this space!

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Thanks for the support. I'll get you a full list and have someone followup. Here is a quick screenshot of my customer portfolio so you can see some of the funds quickly. https://cloudup.com/c_kk6Zi5jC1

It would be awesome if you just listed which funds you support somewhere on your site. I imagine this is a question that will come up again and again.

Actually, fund menu selection does not come up as much as you think... That being said, we are building the page right now and will post it soon!

Why do you have a tax-managed fund in a retirement account?

We own this fund in spite of the fact that its main goal is tax efficiency (given that the efficiency is not needed in retirement accounts). Though the fund is outstanding for tax purposes, it also boasts low turnover, broad diversification, and an extremely low expense ratio of .11% (category median is 1.24%) considering it is not a “true” index fund. The S&P index it follows promotes low turnover, which lowers trading costs. The fund does not own as many mid-cap companies as rival funds and stays true to the small-cap arena, with at least 80% of its holdings in small-cap. This prevents unnecessary redundancy in an overall portfolio.

Thanks for the thorough and thoughtful answer.

For those that don't want to click through:

- VTSAX - VTMSX - VMVAX - VEMAX - VIGAX - VTMGX - VVIAX

Do you also have VTIAX? (International fund, equivalent to VXUS etf)

My small company employer has offered Fidelity Keogh plans for years and now SEP IRAs. We get full brokerage window access, including low cost Fidelity mutual funds, commission-free low cost iShares ETFs, $7.95 commissions on all other stocks and ETFs, free Treasury auction and secondary market bond trades. I don't think it's costing the employer much of anything.

What am I missing?

SEP IRA has worse benefits for employees than a 401(k), but it is cheaper to offer.

I have my company 401k with Vanguard, and I'm a single founder. I do have a single-k, so it may only be harder to set it up if you have two or more employees.

Yes. The Small Business Plan (not the single one) is harder / more annoying. It's also improved a lot in the last five years, but the fact is that Vanguard / Fidelity still don't really compete for this business (yet) and are happy to have these folks figure out the recordation, ERISA, etc. issues.

Do you have any revenue / income yet? Did you raise funding and thus are paying yourself a salary? I'm genuinely curious about single-person 401k plans in the absence of real revenue...

> Do you have any revenue / income yet? Did you raise funding and thus are paying yourself a salary? I'm genuinely curious about single-person 401k plans in the absence of real revenue...

I've been running the business full-time since 2010. I'm paying myself a salary and haven't taken any funding. I don't have plans to scale massively or hire employees.

As far as I recall, I don't think Vanguard cared one way or the other about how much revenue the company was making. It's been a while since I set it up though. :)

I just mean you need revenue to pay yourself such that a tax-deductible contribution to a 401k is actually tax deductible. (Being a solo person with revenue is absolutely fine, I wrongly assumed you had done this recently and thus might be pre-revenue).

In this case, wouldn't a SEP also be an option?

Yep, absolutely. I'm not sure if Vanguard offers them though.

They do.

Yes: https://investor.vanguard.com/what-we-offer/small-business/s...

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