When considering the best 403(b) providers, certain 501(c)(3) tax-exempt organizations and public schools will look for those with the widest array of cost-effective investment options, the best customer service, and additional services to help employers and participants.
Here are our picks for the six best 403(b) companies:
- Vanguard: Best overall for low-cost 403(b) plans
- Fidelity: Best for employees wanting in-person guidance
- Aspire: Best for real-time access to plan details
- T. Rowe Price: Best for providing high-quality market research
- American Funds: Best for clients wanting dedicated advisers
- Human Interest: Best for a streamlined process
- Best 403(b) Companies at a Glance
- Vanguard: Best Overall for Low-cost 403(b) Plans
- Fidelity: Best for Employees Wanting In-person Guidance
- Aspire: Best for Real-time Access to Plan Details
- T. Rowe Price: Best for Providing High-quality Market Research
- American Funds: Best for Clients Wanting Dedicated Advisers
- Human Interest: Best for a Streamlined Process
- How I Evaluated the Best 403(b) Companies
- Alternatives to a 403(b) Plan
- Frequently Asked Questions (FAQs)
- Bottom Line
Best 403(b) Companies at a Glance
| Provider | Online Only | Annual Fund or Other Fees | Admin/Recordkeeping Fees |
|---|---|---|---|
 | Yes | $75 annual fee | $5 monthly per participant |
| Visit Vanguard | |||
 | No | $24 custodial fee | Varies per plan |
| Visit Fidelity | |||
 | Yes | $40 custodial fee | 0.15% of account value |
| Visit Aspire | |||
 | Yes | Not mentioned | $20 |
| Visit T. Rowe Price | |||
 | Yes | $10 | $10 |
| Visit American Funds | |||
 | Yes | Not mentioned | $120 monthly plus $5 per employee |
| Visit Human Interest | |||
Vanguard: Best Overall for Low-cost 403(b) Plans
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|---|---|
| Investment Options | |
In a 403(b) plan with Vanguard, potential investment options include the following:
| |
| Additional Services | |
| It provides access to some of the best mutual funds in the industry through 403(b) plans but doesn’t have additional services, like banking, that may benefit an employer. | |
| Costs | |
| Recordkeeping Fee | $5 per month, per participant |
| Average Expense Ratio | 0.15% average per fund |
| Annual Fee | $75 |
| Visit Vanguard | |
Why I Like Vanguard
I chose Vanguard as the best overall 403(b) provider because it offers nationwide, inexpensive, diversified investments and retirement plans. It has hundreds of mutual funds that are great for focusing on a long-term, passive investment.
This well-established firm with a strong reputation is the second largest mutual fund company globally (as of June 2024). Financial advisers drive Vanguard’s business. As a result, Vanguard doesn’t have offices where clients can get help, so it provides clients with customer service online and over the phone. However, those needing additional assistance can also enlist the help of an adviser, most of whom offer Vanguard products.
You can call and speak with a Vanguard representative to learn more and explore the next steps in the process.
Fidelity: Best for Employees Wanting In-person Guidance
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|---|---|
| Investment Options | |
Investment options through a Fidelity 403(b) include the following:
| |
| Additional Services | |
In addition to 403(b) plans, Fidelity offers many services, such as the following:
| |
| Costs | |
| Custodial Fee | $24 per year |
| Annual Fund Fee | Varies per plan size (typically a flat fee) |
| Visit Fidelity | |
Why I Like Fidelity
Fidelity makes our roundup as one of the top 403(b) companies because of its large network of offices, making it ideal for participants wanting in-person guidance and individual investment advice. It is one of the largest financial service companies in the world and provides a host of banking and brokerage services in addition to 403(b) plans. It also ranks high on the list of the largest mutual fund companies.
While it is one of the best 403(b) providers, it can be more costly than other providers. Also, it offers investment options similar to those of other companies in this guide, such as Vanguard and American Funds. However, Fidelity has strong customer service when compared with most other national providers. Unlike most other companies on this list, it has an extensive network of investor centers where you can work with individual advisers. It also provides customer service through its website and over the phone.
Aspire: Best for Real-time Access to Plan Details
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|---|---|
| Investment Options | |
Investment options available through Aspire 403(b) plans include the following:
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| Additional Services | |
In addition to 403(b) plans, Aspire offers the following types of plans:
| |
| Costs | |
| Recordkeeping Fee | 0.15% of account value |
| Annual Custodial Fee | $40 |
| Visit Aspire | |
Why I Like Aspire
Aspire offers a 403(b) plan with open investment choices for any size plan. It has a complete suite of smart retirement solutions featuring a web-based plan search and fund search through InvestLink. These searches allow for easy, real-time access to all plan details through its open-architecture platform, making it one of our top choices.
This access provides flexibility for advisers and participants with transparent and competitive pricing. The company works with school districts, religious organizations, nonprofit professionals, and healthcare workers to configure a 403(b) plan that best works for your organization.
Aspire also promises access to money managers and investment strategists as part of its customer service. You can contact the company through the mail, phone, and the online form on its website.
T. Rowe Price: Best for Providing High-quality Market Research
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|---|---|
| Investment Options | |
T. Rowe Price has more than 90 mutual funds, including the following:
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| Additional Services | |
Aside from 403(b) plans, T. Rowe Price provides several services, such as the following:
While T. Rowe Price was founded as an asset management firm, it also provides a full suite of investment management and financial services. The firm emphasizes research and investor education, which is where it can add value to 403(b) plans. | |
| Costs | |
| Account Service Charge | $20 per year, per participant |
| Visit T. Rowe Price | |
Why I Like T. Rowe Price
T. Rowe Price makes our list as one of the best financial services firms for providing financial literacy and research tools to individual investors. It offers high-quality market research and investor education tools so that participants can make informed decisions about their saving and investment strategies.
It even has its own line of mutual funds to 403(b) clients, high-value, independent research, and a host of additional services. Although its operation centers on fund management, it also provides a host of investment advisory and brokerage services, education savings plans, and additional investment services for assets outside of 403(b) plans.
Similar to Vanguard, the firm doesn’t have retail offices. Its funds and investment products are available through independent financial advisers around the country. Customer service can be accessed through phone and its website.
American Funds: Best for Clients Wanting Dedicated Advisers
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|---|---|
| Investment Options | |
Investment options available through American Funds 403(b) plans include the following:
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| Additional Services | |
| Although American Funds is a well-established and reputable mutual fund company with a wide array of investment options suitable for 403(b) plans, it provides little else in additional services. It focuses on offering well-managed mutual funds rather than banking or brokerage services that might benefit employers. | |
| Costs | |
| Annual Fee | $10 per participant |
| New Plan Setup Fee | $10 per Social Security Number |
| Visit American Funds | |
Why I Like American Funds
For customers wanting to use independent financial advisers to manage their 403(b) plan, American Funds is an excellent choice. In-depth questions and individual investment advice are provided by independent financial advisers licensed to sell Capital Group American Funds products, which is why it makes it our pick for clients wanting a dedicated adviser. However, a member of The Capital Group Companies, the firm provides minimal customer service itself outside of routine account maintenance.
American Funds is the third-largest mutual fund company on this list, falling just behind Vanguard and Fidelity. It is one of the best 403(b) companies for nonprofits wanting to offer a small group of diversified mutual funds and keep participants from investing in more niche products.
Human Interest: Best for a Streamlined Process
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|---|---|
| Investment Options | |
Human Interest provides limited investment options. Still, the funds it offers are typically the most popular investment vehicles for retirement accounts and provide ample opportunities for participants to grow their assets. Its investment options include the following:
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| Additional Services | |
The primary 403(b) services it offers include the following:
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| Costs | |
| Account Service Charge | From $120 per month plus $5 per employee |
| Visit Human Interest | |
Why I Like Human Interest
With easy setup and administration, Human Interest makes our roundup since it provides a streamlined 403(b) plan process with upfront pricing. Administrative aspects—such as enrollment, payroll sync, and compliance—are streamlined or automated by the company. This makes Human Interest and its 403(b) plan great for small business owners willing to use an online provider for ease of use to save time and money.
Compared with other 403(b) companies, this firm aims to keep administrative costs down and uses flat administrative fees so that business owners know what to expect. While it doesn’t offer payroll services in-house, it works well with most systems and efficiently provides a core group of services.
Like Vanguard, it is almost entirely online, with no retail offices nationwide for clients to get guidance. Also, it doesn’t list additional services that many other providers offer. However, you will have a dedicated account management team to help you set up and administer your plan. You can message through the company’s website or contact a rep via phone.
How I Evaluated the Best 403(b) Companies
Employers who use 403(b) plans have particular needs because setup and administration can be more difficult because of eligibility restrictions. To identify the best 403(b) providers, I considered the following criteria:
- Ease of setup
- Investment options
- Costs
- Customer service
- Additional services
- Assets under management
Alternatives to a 403(b) Plan
Since a 403(b) is only applicable for certain nonprofits, it won’t be the best option for everyone. That said, if you’re looking to set up a retirement plan for a small business, here are some alternatives to consider:
- Traditional 401(k): If you have more than 12 employees in your business, a 401(k) plan may be your best option. It allows you to contribute up to $61,000 per year from a combination of employee deferrals (max $20,500), employer matching (max $20,500), and discretionary employer profit-sharing ($19,500). Check out Sharebuilder 401K, an experienced 401(k) provider, that can provide you with options and resources.
- Safe Harbor 401(k): For-profit companies wanting to structure 401(k) plans to make maximizing contributions easier can qualify their 401(k) as a Safe Harbor plan. Safe Harbor 401(k) plans include generous matching requirements for employee salary deferrals. In exchange, Safe Harbor 401(k) plans exempt themselves from nondiscrimination testing, making it easier for company owners and highly compensated employees to maximize their contributions even if rank-and-file employees don’t participate.
- SIMPLE IRA: A SIMPLE IRA is much less expensive and easier to administer. It allows participants to contribute up to $28,000 annually and to split between employee salary deferrals (limited to $14,000). It also has employer matching (up to another $14,000), and you must match employee deferrals up to 3%. You can reduce the match—but you have to match at least 1% and can’t match less than 3% in more than two years during a five-year period.
Frequently Asked Questions (FAQs)
What is the difference between a 403(b) and 401k?
The main difference between a 403(b) and 401(k) is the type of employer that will be offering the plan. 403(b) is only eligible for certain nonprofit organizations, whereas 401(k) is applicable to for-profit companies.
What are the disadvantages of a 403(b)?
Some disadvantages of a 403(b) plan include limited investment options, high costs and fees, potential penalties, and minimum distribution requirements.
What is the 5-year rule for 403(b)?
For applicable plans, the 5-year rule regarding 403(b) entails post-severance employer contributions, in which the employer must continue contributing to the employee’s plan for five years after their employment ends.
Bottom Line
A 403(b) plan is a tax-deferred retirement plan offered by certain tax-exempt organizations and public schools. Employees save for retirement in a 403(b) plan by contributing to individual accounts, and employers may choose to contribute to employee accounts.
Nonprofits that qualify for a 403(b) plan can provide employees with a great retirement investment plan. Each of the six providers included in this guide offers slightly different benefits and retirement strategies. To proceed, determine which benefits are most important to you and your employees, and choose the best 403(b) provider that best aligns with your company’s needs.
