HR people that run their defined contribution (DC) plan like a 401k or 403b wear many hats and therefore try to make the administration of their plan easy and less time consuming. While technology is threatening to be able to drive our cars, some organizations still struggle with manual entry of payroll information into their DC plan. The HR director of a 100-person brewery attending a TPSU program at the University of Minnesota explains how 360-degree integration works for her and her company.
The brewery’s record keeper is able to receive feeds directly from the company’s payroll vendor which eliminates most of the possibilities of errors and saves the time of having to submit reports or manually key in information. Though the information could be delivered without intervention, the HR professional at the brewery in Minnesota prefers to review the data first to make sure it’s correct and do a reconciliation. So far, no errors have been detected. That’s 180-degree integration.
On the other hand, employees participating in the company’s 401k plan have the ability to make changes to their plan like increasing deferral rates on the record keeper’s system which can be sumitted directly to the company’s payroll vendor. Again, the HR director prefers to review the information first to make sure there are no glaring errors or else the data could be uploaded real time. That’s 360-degree integration.
Along with ease of administration and fewer errors, 360-degree payroll/record keeper integration encourages plan participants to make changes rather than having to fill out forms. Without full integration, features of the Ideal Plan like auto enrollment and auto-escalation as well as the stretch match can be difficult.
While payroll vendors that also provider record keeping services will argue that having one company do everything is better, most record keepers these days integrate with payroll providers. While there are only a national few record keepers, there are hundreds of payroll vendors so the key is finding the right match between record keeper and payroll company which can also mean finding record keepers that integrate with as many payroll vendors as possible. Changing payroll providers is often more painful than changing record keepers.
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