Voya 401k Review: Is It Your Best Option?

Voya 401k Review: Is It Your Best Option?
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Voya Financial is an American financial service company based in New York City. A subsidiary of the ING Group, Voya provides asset management, employee benefits, and brokerage services (mediating the buying and selling of financial securities). The Voya 401k plan is one of the company’s more well known B2B offerings.

Founded in 1991 as ING U.S., the company officially rebranded itself as Voya Financial in April 2014. It has served almost 15 million customers and has around $550 billion in assets under management. Voya currently sits at number 343 on the Fortune 500, employs over 6,000 people, and generates an annual revenue of $8.93 billion.

Voya Leadership Team

Rod Martin – Chairman & Chief Executive Officer

Kevin Silva – Executive Vice President & Chief Human Resources Officer

Michael Smith – Chief Financial Officer

Nancy Ferrara – Executive Vice President of Operations & Continuous Improvement

Maggie Parent – Executive Vice President & Chief Administrative Officer

Voya 401k Plan Overview

Here are the highlights of Voya’s 401k Plan.

Loans & Rollovers

The company allows you to take a loan against your plan account, while observing IRS limits. In case of financial need or an emergency, you can apply for a Hardship Withdrawal, through which the IRS allows participants to take out loans exceeding their pre-set limits.

You can also easily roll over your current 401k funds into another 401k or IRA if you switch jobs. However, you can stay with your current plan if your plan sponsor allows you to.

Usability

When you log into your retirement account, you’ll see a summary of your savings. It will display your estimated retirement income and your goal savings. This lets you assess whether you’re on track to reaching your retirement financial goals or not.

You can also check how your investment funds are performing and what their historic performance has been. You can research new funds, as well, and use pie charts to display your portfolio diversity.

The ‘balance history’ tab lets you see how your portfolio balance has changed over time, through a histogram. In addition, the investments section provides a detailed list of funds and their prices relative to the year, month, and date. It’s designed to provide a user-friendly and streamlined employee experience.

Range of Features

Voya allows participants and plan sponsors to customize their plans. You have optional participation and can change the contribution rate whenever you want.

You also have access to several tools and educational materials that help you with estate planning, investments, tax planning, and family financial planning. A retirement-management tool calculates how much money you need to save to reach your retirement savings goal. It takes into account your age, income, and saving rate to calculate the saving amount. It also shows you how diverse and risk-heavy you need to be with your investments.

Voya also provides educational material including helpful charts and blog posts that explain trading and investments.

Portfolio Analysis

Voya provides a wide array of investment options to choose from, which include stable value funds, index funds, bond funds, foreign investment choices, as well as, small and large-cap options.

You can choose one of Voya’s prebuilt portfolios from the Voya LifePath Retirement Funds. These are a mix of several funds, diversified according to a participant’s age and acceptable risk. The LifePath option does involve aggressive investment and trading in the early years, but moves to passive, later on. This means that if you’re starting your career and your retirement isn’t until 2060, the plan would invest heavily and aggressively. However, if you’re retiring in the next five to ten years, the plan would invest in conservative long-term low-risk funds.

If you opt for the Self-Directed Brokerage Account Option, you gain access to and can invest in over 13,000 mutual funds, allowing you to further customize and diversify your portfolio.

Customer Service

Voya provides targeted customer service to both participants and plan sponsors. You can contact Voya Financial Advisors if you need help with your investments or trading practices (fees may apply).

If you want to know more about the Voya 401k plan and the company’s retirement/investment plans, call 1-800-584-6001. To talk to a financial advisor, you can call 1-800-344-6860. For general customer service, you can call their 24/7 hotline at 1-855-663-8692.

Fees, Costs & Expenses

There is a flat administrative fee which varies depending on the account type, account balance, and employer profile. According to Voya, their managed portfolio expenses range between 0.95 to 2.0%. However, the expenses can go up to 3.5% in special circumstances.

Various other fees include professional management fees, distribution fees, check delivery fees, and loan fees. The fees are applicable upon adoption of the services associated with them.

For the brokerage account, there is a $42.50 annual maintenance fee for the IRA. In addition, there’s a $47.00 fee for annual account maintenance. This lets you make 10 trades and includes prospectus and confirmation fees. The fee doesn’t include limit orders and market orders greater than 5,099 shares.

To find out more about brokerage fees and charges, study this PDF.

Voya 401k Review

Voya has a solid 401k plan, but there are positives and negatives to it. Here are the most noteworthy pros and cons of Voya’s 401k plan.

Voya 401k Pros

The following are some points that set Voya apart as a brokerage company:

  • Voya has a BrightScope Rating of 83, which is above the average in its peer group.
  • The company comes in the top 15% of companies in terms of total plan cost, salary deferral, account balances, and company generosity.
  • Voya has a lot of educational material designed to help beginner investors make better investment decisions.
  • They provide several tools to help you customize your plan, evaluate your savings, and make better decisions.
  • The LifePath custom portfolio and investment management option is great for those who’re new to investing, or can’t dedicate time to it but want to make good investments.

Voya provides decent retirement and brokerage services. It also helps set up employee benefits and provides integrated or third-party services.

What is Voya Best Known for?

With over 11,700 active participants across the US and more than $1.7 billion in plan assets, Voya is best known for its managed LifePath Retirement Funds portfolios.

Voya is best for:

  • Beginner Investors
  • High-Balance Customers
  • IRA Accounts
  • Separately Managed Accounts

Voya’s combined services can be useful for employers and plan sponsors who prefer all their financial services from the same place.

Other Brokerage Firm Alternatives

You can compare Voya with the following competitor companies to get a better idea of the quality of their service.

  1. MassMutual – Initially founded in 1851 by George W. Rice, the company currently has almost $266 billion in assets under management. MassMutual specializes in life insurance, disability insurance, and retirement services, among other offerings. The company is ranked at number 84 on the Fortune 500 and generates annual revenue of $39.26 billion.
  2. Prudential Financial – With over $1.394 trillion in assets under management, Prudential is one of the biggest financial service providers in the US. The company specializes in life insurance, mutual funds, real estate, annuities, and retirement services. Prudential has a BrightScope rating of 84, and over $8.7 billion in plan assets. It currently sits at number 52 on the Fortune 500 and made $62.992 billion in revenue in 2018.
  3. Pacific Life – The Nebraska-based insurance and investment giant was founded in 1868 by Leland Stanford. The company specializes in mutual funds, life insurance, annuities, and other investment products. Pacific Life is known for launching new investment platforms, such as Swell Investing, to add to its brokerage services. The company is currently ranked at number 313 on the Fortune 500 and generated $10.699 billion in revenue in 2018.

Voya 401k vs Student Loan Benefits

As we move towards a more ‘instant’ culture, people are becoming more vigilant about their current debts than their long-term financial stability which can be considered two sides of the same coin. This is why 49% of millennials today prefer to have student loan benefits over 401k contributions. The following bills were introduced as a result of this.

Retirement Parity for Student Loans Act

The Retirement Parity for Student Loans Act was proposed in 2018 and aimed to amend the 1986 Internal Revenue Code. The amendment would treat student loan payments as elective deferrals in the case of employer matching contributions. This means that employers will be able to make student loan matching contributions for their employees through their 401ks.

Employer Participation in Repayment Act

Before, heavy taxes made employer contributions to employee student loans very costly. Hence, the Employer Participation in Repayment Act of 2019 aims to make all employer contributions tax-free so it is more affordable to companies and more helpful to the employees. It is eligible for both private and federal loans. Employers can effectively make tax-free contributions of up to $5,250 on both the principal and interest amounts.

Because of the recent interest in student loan repayments as an employee benefit, companies like FutureFuel.io are helping to enable it. With partners like Salesforce and Transamerica employees, they’ve figured it out by providing a platform for employees to manage all their student debt in one dashboard. Employees also receive real-time notifications of employer contributions to their student loans.

Is the Voya 401k Plan Right for You?

Voya’s 401k plan is good, but their brokerage services are what sets it apart. Their managed portfolios are best for most people, since Voya makes the investments for them.

As a plan sponsor, Voya’s 401k plan may be expensive for you, but will most likely be popular with your employees. All in all, before making a final decision, be sure to compare Voya with other 401k providers.