Which recordkeepers offer a mutual-fund-only window?

For an individual-account retirement plan that provides participant-directed investment, an employer seeks a mutual-fund-only window.

It’s okay if the window is provided through self-directed brokerage accounts. But it must be limited to funds, and must preclude individual stocks, bonds, and securities other than shares of registered-investment-company mutual funds.

The selection of mutual funds must not be limited by anything beyond the recordkeeper’s and the broker-dealer’s operations constraints.

Which recordkeepers offer this?

My direct experience with a search is years old, but I think all of the major vendors can create a limited window of mutual funds only even though they can also easily provide a broader offering of publicly traded securities.

TIAA-CREF is in its own world.

The employer is considering providing that the plan’s investment alternatives are the mutual funds in the brokerage window, and that there is no designated investment alternative.

It’s mutual-funds-only because the firm prohibits its employees from trading individual stocks, bonds, and securities other than shares of SEC-registered funds.

About expenses, the employer will pay both the recordkeeper’s fee and the broker-dealer’s fee (for those participants who are employees, not for those who left the employer).

I know many retirement-plan practitioners don’t like an absence of designated investment alternatives, feeling it can be hard on some participants.

But that policy concern aside, are there operations difficulties or other disadvantages in administering a plan with only nondesignated investment alternatives?

For those recordkeepers that offer services regarding a retirement plan’s self-directed brokerage accounts, does a recordkeeper require that a contribution amount allocated to a participant’s account be credited first to an investment other than the brokerage account?

Or may the participant’s contribution amount be immediately allocated to her brokerage account?

Again, in my limited personal experience, contributions for a participant, or deferrals of the participant, are allocated according to the participant's investment direction on file with the plan administrator (and by extension to the investment provider). The plan should have an election by each contribution/deferral-eligible participant to identify where new money goes. This is different from an investment instruction from a participant to change an existing investment (e.g. portfolio rebalancing). I don't know the inner workings of the providers, but I imagine the plan sends money to some clearing account at the provider, not the participant's brokerage account.* The provider then allocates in accordance with each participant's investment instructions for new money.

*I cannot say for any provider what is done internally. Maybe the brokerage account for each recipient is the clearing account that receives the money first before allocation according to investment instructions of the participant. That is not my experience looking at it from the plan administrator's perspective.

As an example, Charles Schwab PCRA account (which is used by several RK's as the SDBA) has an application.  On that application you can restrict the investments available in several ways, including options,  individual securities, and even taxable vs non-taxable mutual funds (and several others). I've seen TD Ameritrade SDBA applications do the same thing.  These applications are plan-level set-up applications, not the individual.  I actually think it is the norm for these types of accounts. 

You're asking about the recordkeeper but that's not the right question. These elections are made with the brokerage account provider on their applications.  The RK has no control at all over what happens inside the brokerage accounts.

Thanks, QDROphile and austin3515.

I’m aware that a plan’s fiduciary sets general directions about what’s excluded from the brokerage accounts.

I’m aware that a recordkeeper has no control over, and often little or no information about, what happens within the brokerage account. For some plan sponsors, that can be a feature, not a bug.

After I asked my question about immediate or delayed crediting to the brokerage account, I found that it’s feasible, if needed, to use a money-market fund for processing without making that fund a designated investment alternative.