During a recent Fiduciary Education Program at Fordham University Fred Barstein, Founder of The Plan Sponsor University (TPSU), interviewed one of the program attendees who as Director of Human Resources has responsibility for overseeing the company 401k Plan. The company is an advertising agency – so they are accustomed to moving fast. Her concern was communication between her Plan Record Keeper and her Payroll Processor.
The discussion quickly turned to the difficulties that arise when the Payroll Department does not have a good working relationship with the 401k Plan record keeper. Regardless of how much time you are with a company that sponsors a 401k Plan, you can understand after only one pay period, the importance of maintaining good lines of communication among all plan service providers.
Get it Right from the start
Having a respect for accuracy and timeliness is important for anyone administering services for qualified retirement plans. As is knowing the rules. Speed of timely deposits is very important – especially during a DOL Audit or an outside Plan Audit. But speed is trumped by the need for accuracy. If your company needs to tighten 401k deferral processing practices a good place to begin is during the Onboarding Process. Maintaining and utilizing established procedures will make accuracy and timeliness simpler to achieve. A Plan Administrator wants to make the entry into the retirement plan simple.
Each company should review with some regularity – semi-annual or annually – how they process payroll deposits of new plan deferrals. (Consider coordinating some targeted employee communications for an added touch.) Set everything to run as smoothly as possible so no one needs to rely on Post-it note reminders or manual calculations. Again, focus on a solid Onboarding Strategy for maximum efficiency.
Why not Auto Enroll?
Auto enroll makes sense for a lot of reasons, but Auto Enroll is a handy tool for ‘getting it right the first time.’ By doing so, your new-hires never need to be concerned with “when can I start my 401k deferrals.” Make joining the retirement plan a process that begins at date of hire. Your company and your employees will be glad you did!
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