We have been working with Fidelity for many years. In fact we often set up a plans on Fidelity’s platform for investment.
Fidelity has been one of our favorite providers to deal with along with Vanguard and Charles Schwab. But if you’re looking to set up a defined benefit plan with Fidelity you might find it a challenge. They really don’t have a lot of options for small business owners with 10 or fewer employees.
If you have a company that was 50 or 100 employees Fidelity can often be a good option. They do have actuaries on staff but based on what I’ve seen over the years they don’t really get too involved in small companies.
Fidelity certainly is not gonna give you any tax or legal advice. But they still are a nice custodian to deal with.
As part of our on boarding process at Emparion, we help people set up their defined benefit plans or cash balance plan accounts at Fidelity. I’ve never really seen a Fidelity defined benefit plan or a Fidelity cash balance plan. But I’m sure they’re out there.
One of the downsides of setting up a plan directly with Fidelity is the fact that you would be hostage or captive to their investment platform. For example when you work with us, we can use our plan document that is customize for your business and set it up directly on the Fidelity platform. So you have all the range of options to invest and it can make the process very simple and easy. In addition, One of the downsides you would find at Fidelity as you would be captive to them and you could not open up accounts at other custodians using their plan document.
For example, we could set up a plan for you and then you could use that plan document to open up an account at Fidelity and also account at another provider. We would use the combined investment accounts to test the plan. So you have the ability to move from one provider to another. This can make the process a little cheaper and more efficient.
I would also say that Fidelity is going to tend to be a little bit more expensive for the larger plans. I’ve heard that Fidelity defined benefit plans can run as much as $10,000 a year to administer. Of course the pricing can make some sense when you consider that therefore many more participants.
You certainly should consider the Fidelity defined benefit plan if you have many employees. That way you can have direct access to their investment professionals and actuaries. But for the small company of 10 employees or less, the Fidelity cash balance plan or defined benefit plan usually isn’t going to make a lot of sense.
Hopefully, you have learned everything you need to know about Fidelity Defined Benefit Plans
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